McKeever Solicitors - News and Publications Feed The latest news and publications from McKeever Solicitors in Dublin, Ireland. https://www.mckr.ie en Copyright McKeever Solicitors. All rights reserved. 30 New Liquor Licence for Craft Breweries, Distilleries, Cider, Perry and Spirit producers The Intoxicating Liquor (Breweries and Distilleries) Act 2018 was signed in to law on the 3rd September 2018. The Intoxicating Liquor (Breweries and Distilleries) Act 2018 was signed in to law on the 3rd September 2018. The Act creates a new retail licence which allows craft breweries, distilleries Cider, Perry and Spirit producers to sell alcohol manufactured on the premises to tourists and visitors who have participated in a guided tour of the premises, between the hours of 10am and 7pm. It also allows premises that obtain a relevant licence to sell intoxicating liquor produced on the premises to members of the public for consumption off the premises between the hours of 10am and 7pm (12.30pm and 7pm on Sundays). Under the provisions of the Act, a person who already holds a relevant manufacturer’s licence may apply to the Circuit or District Court for a certificate for a retail licence from the Revenue Commissioners. This act is long overdue given the huge increase in such artisan producers over the last 10-15 years. It will be warmly welcomed by that sector and the tourism industry generally. Nicola Sweeney the head of our liquor licensing department will be happy to assist in relation to any such applications, Copyright © Nicola Sweeney, McKeever Solicitors, 5th September 2018. This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further information, please contact Nicola Sweeney. https://www.mckr.ie/insights/news-and-publications/new-liquor-licence-for-craft-breweries-distilleries-cider-perry-and-spirit-producers https://www.mckr.ie/insights/news-and-publications/new-liquor-licence-for-craft-breweries-distilleries-cider-perry-and-spirit-producers Wed, 05 Sep 2018 01:00:00 +0100 www.mckr.ie Termination of Employment If your boss approaches you and says, “Look, things are not working out. I think we need to talk “off the record”, what are your options? Well, under Irish law you have quite a few. If your boss approaches you and says, “Look, things are not working out. I think we need to talk “off the record”, what are your options? Well, under Irish law you have quite a few. Firstly, check your contract to see what the correct procedures are, what your notice period is and what entitlements may be built into your contract, what restrictions there may be on you when you leave. Secondly, if you were in the job for more than a year, you have the protection of the Unfair Dismissal Acts under which your employment can only be terminated on stated grounds; e.g.: Misconduct – serious misconduct Lack of capability / Lack of competence in the job Redundancy Other substantial grounds which would justify dismal. In every case of dismissal for cause, Irish Law requires certain basic (or fair) procedures to be adhered to before employment can be terminated. If the employer does not follow the correct procedures they will fall foul of the Workplace Relations Commission (WRC) which is the forum set up to deal with such disputes. An employee has 6 months (extended within exceptional circumstances) to bring a claim. The WRC has no power to award costs and these cases can take a long time to be heard in the WRC (up to a year) and, apart from reinstatement, the WRC only has the power to award compensation for financial loss. So if you get alternative employment on the same salary you might only be awarded compensation for the time you are between jobs. In many cases going to the WRC, is not an attractive proposition for either side. This though does give you leverage as the employee. If your employment has been terminated as a result of a disability or one of the nine grounds of discrimination, you will have a separate claim to the WRC which is not linked to financial loss and which may make those options more attractive. You may have, wittingly or unwittingly, made a protected disclosure, and would have the benefit of the protections for whistleblowers, with the possibility of an injunction and compensation up to 5 years? Finally, in the case of dismissals for cause, if you are in an executive or management role, you may be able to seek an injunction in the High Court to stop the termination pending resolution of all issues with your employer. Such applications will usually hinge on procedural errors by the employer and are best used for people in roles where the alternative job market is small. The alternative is that when you are called into such a meeting and receive a proposal from your employer you should reserve your position and say very little, or maybe nothing, other than that you have to speak to your lawyer. What happens then is that a pragmatic approach may be taken where both parties seek to keep the matter strictly confidential and effectively buy off the risk of either an injunction or an unfair dismissal claim assuming that the termination does not fall within any of the reasons referred to above. The best course of action is to then meet with your Solicitor. Typically, the company will attempt to dress up the termination as a redundancy. Both sides will engage in negotiations to try and hammer out a deal to the benefit of all parties. This is the approach that we favour in such cases. It may be a short-term gain for the employee to rush into Court or the WRC all guns blazing, but in the long-term this may not be the best outcome for the individual. With a commercial and common sense approach on both sides, these kind of cases can be wrapped up in a matter of days enabling both parties to move on and the employee resume their career in an environment better suited to their needs. If your employer is not willing to engage or be reasonable, then you must be ready to launch proceedings – whether in court and or the WRC. Copyright © Andrew Clarke and Ercus Stewart SC, McKeever Solicitors, 4th September 2018. This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further information, please contact Andrew Clarke. https://www.mckr.ie/insights/news-and-publications/termination-of-employment https://www.mckr.ie/insights/news-and-publications/termination-of-employment Tue, 04 Sep 2018 01:00:00 +0100 www.mckr.ie A new group of angel investors wants to back Irish startups expanding into the UK THE HALO BUSINESS Angels Network (HBAN) has launched a new angel investor syndicate for UK-based investors to back Irish startups. The London Syndicate plans to invest €3 million in early stage Irish startups over the next three years. HBAN is a joint operation backed by Enterprise Ireland and InterTradeIreland that helps groups of angel investors to invest in companies. THE HALO BUSINESS Angels Network (HBAN) has launched a new angel investor syndicate for UK-based investors to back Irish startups. The London Syndicate plans to invest €3 million in early stage Irish startups over the next three years. HBAN is a joint operation backed by Enterprise Ireland and InterTradeIreland that helps groups of angel investors to invest in companies. London Syndicate is HBAN’s second international business angel group, following a similar program in New York with Digital Irish Angels (DIA), a US-based organisation. It’s being led by chairman Harry McDermott, an Irish businessman who has been based in London for over 20 years. He sold his consulting firm Hudson & Yorke to French service management company Wavestone in 2015. The syndicate aims to connect early stage companies that are seeking funding – and are ready to grow – with investors. All companies are vetted before they are presented to investors. McDermott will be representing HBAN in London. The syndicate held a soft launch in March to gauge interest from London investors. “It convinced us that this had legs, there’s definitely something in this. There’s a community of people in London with Irish affinity who are interested in supporting and investing in the Irish startup ecosystem,” McDermott said. The syndicate hopes to close its first deal by the end of the year and it aims to invest in up to six Irish startups over the next 12 months with a focus on young firms with the potential to expand in the UK market and beyond. All of the details are still being hammered out by HBAN, however around a dozen angel investors have joined the group so far. “We will be looking at minimum investment per syndicate member,” McDermott said, although he added that the exact figure had not been agreed on yet. “We have to separate ourselves from the crowdfunding market.” According to McDermott, joining a syndicate is more efficient for an angel investor rather than going on their own. “Being a member of the syndicate means there’s a diversified effort in terms of the evaluation of the companies,” he said. “There’s the ability to participate in a larger funding round that one can’t do as an individual.” The syndicate plans to hold quarterly meetings where HBAN will send over a number of verified startups to the UK to pitch their business to members. The programme will look at a wide remit of sectors, but big areas of interest are fintech and medtech. “I’m trying to attract interest in the emerging space science and technology sector in Ireland because there’s a very buoyant and emergent early stage space science and technology scene in the UK,” McDermott added. Incentives All the companies that receive investment from the syndicate must be entering the UK market or have serious plans to do so. Irish companies will not be required to incorporate in the UK but they must be accredited under the SEIS (Seed Enterprise Investment Scheme) there, which provides tax benefits for angels. “It doesn’t have to be a fully fledged subsidiary company, so it can be a branch office,” he said. “In the absence of an existing presence, a business plan to enter the UK. It has to be approved by HMRC and accredited under the SEIS scheme.” The UK market is still an attractive prospect for many companies despite the ever-looming shadow of Brexit, he added. McDermott, who describes himself as “unashamedly in the remain camp”, said the whole matter was an “unwelcome situation”. “In the absence of a second referendum, I think that the best we can hope for is the minimal disruption possible to all (capital) flow,” he said. https://www.mckr.ie/insights/news-and-publications/a-new-group-of-angel-investors-wants-to-back-irish-startups-expanding-into-the-uk https://www.mckr.ie/insights/news-and-publications/a-new-group-of-angel-investors-wants-to-back-irish-startups-expanding-into-the-uk Thu, 31 May 2018 01:00:00 +0100 www.mckr.ie Home Loans Without Borders Background Retail financial services, from bank accounts, payment cards, consumer and mortgage credit, insurance and long term savings products, are an integral part of people’s daily lives. Based on statistics from July 2016, quoted by the Commission, only 7% of consumers had purchased a financial service from another EU Member State. In its March 2017 Action Plan, the EU Commission set out the remaining obstacles and work to be undertaken to bring about a single market for retail financial services, so that the distinction between domestic and cross border providers of financial services will no longer matter. Background Retail financial services, from bank accounts, payment cards, consumer and mortgage credit, insurance and long term savings products, are an integral part of people’s daily lives. Based on statistics from July 2016, quoted by the Commission, only 7% of consumers had purchased a financial service from another EU Member State. In its March 2017 Action Plan, the EU Commission set out the remaining obstacles and work to be undertaken to bring about a single market for retail financial services, so that the distinction between domestic and cross border providers of financial services will no longer matter. What has been adopted so far As of February 2018, amongst other legislation, the SEPA Migration Regulation1, and Directives on Payment Accounts 2, Payment Services 2 3, Consumer Credit 4, and the Mortgage Credit Directive 5 have been adopted. The Mortgage Credit Directive From a consumer’s perspective, the Mortgage Credit Directive (MCD) is the most significant, as not only is taking out a Mortgage to buy a home (residential immovable property 6 ), the most significant borrowing a consumer will undertake in his or her lifetime, it also is a product where significant differences in pricing exist between Member States. Development of a single market for Mortgages has been slow to take off, even though the MCD was required to be implemented in all Member States by the 21st of March 2016. The MCD Overview In drafting the MCD, the EU adopted regulatory approaches common to many EU directives in the financial services sector. As regards creditors and credit intermediaries, these requirements include: Conduct of business obligations such as – (i) requirements to act honestly, fairly, transparently and professionally taking account of the rights and interests of the consumers and (ii) regulation of the manner in which creditors remunerate their staff and credit intermediaries. Note the MCD allows Member States to prohibit or impose restrictions on payments from a consumer to a credit or credit intermediary prior to the conclusion of a credit agreement (article 7). In addition, the European Banking Authority (EBA) have published Guidelines on remuneration policies and practices related to the provision and sale of retail banking products and services. The Guidelines apply from 13 January 2018. Information – The MCD sets out information required to be provided to consumers at both pre-contract and contract stages. This information must be provided free of charge (articles 8,10,11,13 and 14 to 16). Knowledge and competence requirements for staff (article 9). Tying and bundling practices Member states shall allow bundling practices but must generally prohibit tying practices. However, the article sets out circumstances where tying may be allowed (article 12). Creditworthiness and suitability assessments 7 Creditworthiness assessments in both the Consumer Credit Directive and the Mortgage Credit Directive 8 aim to prevent irresponsible lending and borrowing. In addition to the detailed requirements in articles 18 to 21, the EBA have published Guidelines on Creditworthiness Assessment. Under Article 16(3) of the EBA Regulation (Regulation (EU) no 1093/2010) competent authorities and financial institutions must make every effort to comply with these guidelines. Valuations: Article 19 of the MCD requires that Member States must ensure that reliable valuation standards are in place and are used by creditors. Such standards should take into account of internationally recognised valuation standards. Foreign currency loans and variable rate loans: Where a credit agreement relates to a foreign currency loan, Member States must have an appropriate regulatory framework in place at the time the credit agreement is concluded to at least ensure that (a) the consumer has a right to convert the credit agreement into an alternative currency under specified conditions or (b) there are other arrangements in place to limit the exchange risk to which the consumer is exposed. Article 23.2. specifies what the alternative currency must be. Variable rate credit agreements: Where the credit agreement is a variable rate credit, article 24 requires member states to ensure that: (i) any indexes or reference rates used to calculate the borrowing rate are clear, accessible, objective and verifiable by the parties to the credit agreement and the competent authorities and (ii) historical records of indexes for calculating the borrowing rates are maintained either by the providers of these indexes or the creditors Early repayment: Under article 25, member states must ensure that consumers have the right to repay their credit before the expiry of the credit agreement. The consumer is entitled to a reduction, in that event, to the total cost of the credit, such reduction consisting of the interest and the costs for the remaining duration of the contract. Member states may set conditions on the exercise of that right. Examples are given and they are important. Flexible and reliable markets: Member states must have appropriate mechanisms in place to ensure that the claim against security is enforceable by or on behalf of creditors. In addition, creditors must keep appropriate records concerning the types of immovable property accepted as security as well as the related mortgage underwriting policy that is used (article 26). Information concerning changes in the borrowing rate is regulated by article 27. Arrears and foreclosure: Article 28 of the MCD requires that member states adopt measures to encourage creditors to exercise reasonable forbearance before foreclosure proceedings are initiated. Default charges must be no greater than is necessary to compensate the creditor for costs incurred as a result of the default. In addition to article 28 which is extensive, the EBA have published Guidelines on Arrears and Foreclosure. Issues for Cross Border Lenders: Development of a Cross Border market for Mortgage Credit Intermediaries For the first time, the MCD established a cross border harmonised regime for the authorisation and supervision of brokers and for the passporting of their services (for which they are authorised) into other Member States. However, credit intermediaries are not allowed to offer their services in relation to mortgages offered by non credit institutions to consumers in a member state where such non credit institutions are not allowed to operate. The MCD also permits member states to allow a broker to appoint an appointed representative for which it will be responsible. There are specific requirements for tied intermediaries. Maximum harmonisation in two instances The MCD is largely a minimum harmonisation measure (thus enabling member states to introduce more stringent measures). This is constrained in two instances where member states must not diverge from the MCD; (i) article 14(2) and Annex II, the requirement to provide standard pre-contractual information for borrowers through a European Standardised Information Sheet (ESIS) which is contained in Annex II; and (ii) parts of article 17 and Annex I, the requirement to apply a consistent EU standard for the calculation of the annual percentage rate of charge (APRC). Essentially the APRC is to be calculated in accordance with the mathematical formula set out in Annex I based on the assumption that the credit agreement is to remain valid for the period agreed. The Commission has published a mortgage credit webpage with materials relating to calculating the APRC and published an Excel simulator tool to help users calculate the APRC of a given credit. Where the MCD does not or may not apply The MCD does not apply to: certain equity release credit agreements; credit agreements where the credit is granted by an employer to his employees as a secondary activity where such a credit agreement is offered free of interest or at an APRC lower than those prevailing on the market and not offered to the public generally; credit agreements where the credit is granted free of interest and without any other charges except those that recover costs directly related to the securing of the credit; credit agreements in the form of an overdraft facility and where the credit has to be repaid within one month; credit agreements which are the outcome of a settlement reached in court or before another statutory authority; and certain credit agreements which relate to the deferred payment, free of charge, of an existing debt. Member States may decide not to apply (amongst others): Articles 11 and 14 and Annex II to credit agreements for consumers, secured by a mortgage or by another comparable security commonly used in a Member State on residential immovable property or secured by a right related to residential immovable property, the purpose of which is not to acquire or retain the right to residential immovable property, provided that the Member States apply to such credit agreements (Articles 4 and 5 of and Annexes II and III to Directive 2008/48/EC); the MCD to credit agreements which relate to an immovable property where the credit agreement provides that the immovable property cannot at any time be occupied as a house, apartment or another place of residence by the consumer or a family member of the consumer and is to be occupied as a house, apartment or another place of residence on the basis of a rental agreement; the MCD to credit agreements which relate to credits granted to a restricted public under a statutory provision with a general interest purpose, free of interest or at lower borrowing rates than those prevailing on the market or on other terms which are more favourable to the consumer than those prevailing on the market and at borrowing rates not higher than those prevailing on the market; the MCD to bridging loans. Member State Discretions Member State discretions under the MCD are extensive and need to be checked by an incoming creditor against those granted by his home state. Generally, one would expect National Regulatory Authorities to publish the discretions where exercised and how they have exercised the discretions on their websites. An example of a member state discretion is contained in article 22 (which regulates the standards for advisory services). Amongst other requirements, the creditor, credit intermediary or appointed representative must explicitly the consumer, in the context of a given transaction, whether advisory services are being or can be provided to the consumer. Member States may prohibit the use of the term ‘advice’ and ‘advisor’ or similar terms when the advisory services are being provided to consumers by creditors, tied credit intermediaries or appointed representatives of tied credit intermediaries. Non Credit Institution Lenders The MCD in article 35 requires member states to ensure that non-credit institutions are subject to adequate admission, registration and supervision arrangements. Enforcement The requirements in Article 28 are also extensive and a Member State implementation of this article would need to be carefully considered. In addition, the EBA Guidelines will have to be complied with. Maximum harmonisation The two areas of maximum harmonisation (ESIS and the APRC) and referred to above must be complied with. Extension to non consumers It would be important for an incoming creditor to check whether the Member State had extended the MCD regulation to non residential properties. Changes needed to make a cross border market happen The Payment Accounts Directive already requires in article 16.2 that Member States ensure that consumers legally resident in the Union have the right to open and use a payment account with basic features with credit institutions located in their territory. Such a right shall apply irrespective of the consumer’s place of residence. However, there are some limitations on this right. Access to good Credit Data For Credit institutions or authorised lenders in other members states access to good credit data is essential. Article 21 of the MCD requires each Member State to ensure non discriminatory access for all creditors from all Member States to databases (whether public or in private ownership) used in that Member State for assessing the creditworthiness of consumers and for the sole purpose of monitoring consumers’ compliance with the credit obligations over the life of the agreement. However, even with these access rights, the Commission pointed out that in some Member States, credit registers only report on missed payments (i.e. negative reporting); in others, they also report on the regularity of payments (i.e. positive reporting). Moreover, credit data is usually shared only reciprocally. As a result, credit registers are not interoperable, the relevance of the available data for creditworthiness assessments is unclear, and information is not widely used across borders. Some work to address these issues is already under way. There are market-led reciprocal information exchange agreements between credit registers in different Member States where national reporting traditions are similar. However, this still leaves many gaps. In 2011 the European Central Bank initiated a project called AnaCredit (analytical credit datasets) to set up a dataset containing detailed information on individual bank loans in the euro area, harmonised across all Member States. This work should lead to further data standardisation on loans. Under the CMU Action Plan, the Commission is exploring ways of improving the availability of financial and credit information about small and medium sized enterprises for (alternative) lenders and investors. Electronic Identification of Customers Cross-border provision of financial services will not take off as long as consumers have to appear at providers’ offices to be identified, receive disclosure documents on paper, and give handwritten signatures on contracts. A major step in this context is the Regulation on Electronic Identification (eIDAS) 9 which (on a cross border basis allows for public services and trust services) (i) sets conditions under which member states recognise means of eID of natural and legal persons falling under another member state’s eID scheme which has been notified to the European Commission (ii) lays down rules for trust services, in particular for electronic transactions and (iii) establishes a legal framework for electronic signatures, electronic seals, electronic time stamps, electronic documents, electronic registered delivery services and certificate services for website authentication. In the draft Fifth Money Laundering Directive 10 amending the Fourth Money Laundering Directive (AMLD IV) 11 two of the proposed changes to AMLD IV are significant. They apply eIDAS to the Fourth Money Laundering Directive in requiring of Member States: that obliged entities take adequate steps to ensure that the third party provides immediately, upon request, relevant copies of identification and verification data, including, where available, electronic identification means, relevant trust services as set out in Regulation (EU) No 910/2014 or any other secure, remote or electronic, identification process regulated, recognised, approved or accepted by the relevant national authorities; and that customer due diligence measures shall comprise in part identifying the customer and verifying the customer’s identity on the basis of documents, data or information obtained from a reliable and independent source, including, where available, electronic identification means, relevant trust services as set out in Regulation (EU) No 910/2014 or any other secure, remote or electronic, identification process regulated, recognised, approved or accepted by the relevant national authorities; Cross Border Payments in Euro 12 The Regulation on cross-border payments equalised fees for cross-border and national payments in euro within the EU. Non euro EU payments are not covered by it. In July 2017 the Commission announced a public consultation on amending this Regulation. The objectives are to reduce charges on cross border transactions in all member states, review good and bad practice in dynamic currency conversion and consider the most appropriate way to allow consumers choose the best rate. FinTech Developments Separately on the 8th of March 2018, the Commission published its FinTech Action Plan 13 (COM 109 final). Of particular interest is the Commission’s comment that supervisors may take different approaches to identifying the applicable EU legislative framework and applying proportionality when licensing innovative business models, such as with online platforms acting as brokers/intermediaries, p2p insurance, virtual currencies and automated investment advice, Initial Coin Offering, etc. Additionally, the European Banking Authority identified differences in authorisation and registration regimes 14 as an area requiring further attention It is to be noted that the European Central Bank (ECB) also recently launched a consultation on a ‘Guide to assessments of FinTech credit institution license applications’ 15 in September 2017. The Guide explains the application process, the licensing requirements for credit institutions in general and specific considerations for those with fintech business models. All of these developments, together with the proposals in the FinTech Action Plan (which are outside the scope of this article) will result in cross border Mortgage lending through electronic platforms being developed and available sooner rather than later. © Copyright McKeever Solicitors 2018 – All rights Reserved. As published by Devlin Media in the Irish Public Sector Magazine This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. 1 Regulation 248/2014 (OJ L 84, 20.3.2014, p. 1–3) – Applied from the 1st February 2014. 2 Directive 2014/92/EU (OJ L 257, 28.8.2014, p. 214–246 ) – implemented into Irish law on 18th September 2016. 3 Directive 2015/2366/EU (OJ L 337, 23.12.2015, p. 35–127 ) – implementation deadline – 13th January 2018. 4 Directive 2008/48/EC (OJ L 133, 22.5.2008, p. 66–92 ) – implemented in Ireland on 11th June 2010. 5 Directive 2014/17/EU (OJ L 60, 28.2.2014, p. 34–85) – implemented in Ireland on the 21st March 2016. 6 The MCD applies to credit agreements (i) that are secured either by a mortgage or by another comparable security commonly used in a member state on residential immovable property or secured by a right relating to residential immovable property; and (ii) the purpose of which is to acquire or retain property rights in land or in an existing or projected building. 7 Articles 18 to 20 of the MCD. 8 Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014 on credit agreements for consumers relating to residential immovable property and amending Directives 2008/48/EC and 2013/36/EU and Regulation (EU) No 1093/2010 (OJ L 60, 28.2.2014, p. 34–85). 9 Regulation 910/2014 (OJ L 257, 28.8.2014, p. 73–114). It came into force on the 1st July 2016. 10 http://data.consilium.europa.eu/doc/document/ST-15849-2017-INIT/en/pdf 11 Directive (EU) 2015/849 (OJ L 141, 5.6.2015, p. 73–117) of the 20th of May 2015. 12 Regulation (EC) No 924/2009 (OJ L 266, 9.10.2009, p. 11–18) of the European Parliament and of the Council of 16 September 2009 on cross-border payments in the Community. 13 https://ec.europa.eu/info/sites/info/files/180308-action-plan-fintech_en.pdf,/a> 14 https://www.eba.europa.eu/-/eba-publishes-a-discussion-paper-on-its-approach-to-FinTech 15 https://www.bankingsupervision.europa.eu/press/pr/date/2017/html/ssm.pr170921.en.html https://www.mckr.ie/insights/news-and-publications/home-loans-without-borders https://www.mckr.ie/insights/news-and-publications/home-loans-without-borders Mon, 16 Apr 2018 01:00:00 +0100 www.mckr.ie Do I need a survey to buy an apartment or house? When buying a house or an apartment there are a number of things to consider. Among these is whether you should obtain a survey of the property. Below we go through the benefits of obtaining a survey and the reasons we strongly advise purchasers to get an independent survey carried out. When buying a house or an apartment there are a number of things to consider. Among these is whether you should obtain a survey of the property. Below we go through the benefits of obtaining a survey and the reasons we strongly advise purchasers to get an independent survey carried out. 1. Is a survey necessary when purchasing a house or apartment? We would advise that you should always obtain a survey for the following reasons: The first reason is because of the legal rule of “caveat emptor” (or “buyer beware”) which applies to sales of buildings. A vendor of a building is under no duty to a purchaser to ensure that the building is free from defects. Unless there is agreement on the point, it is up to the purchaser to satisfy himself that the building is sound and fit for any particular purposes. There are a few exceptions to this rule – such as where there has been fraud or negligent misrepresentation, or under certain types of construction contracts – but in general the physical condition of the house is a concern of the purchaser, not the vendor. The second reason is that buying a house is one of the most important financial transactions in a person’s life. Nearly every building will have some defects some of which could be serious. In our view it is not sensible to embark on a major investment like this without having checked it out as thoroughly as is appropriate in all the circumstances so as to be in a position to make an informed decision. The cost of doing this should be looked on as part of the investment. 2. Surely if the lender gets the property checked out it is not really necessary to get a second survey, particularly when I have to pay for it as well? In our opinion you cannot safely rely on the “valuation report” carried out by the lender. They usually get valuers to do inspections to establish a value of the property bearing in mind the amount of the proposed loan. Some of the “valuers” used by lenders are architects or engineers, but most are not. The valuer is not particularly concerned with defects except to the extent that they affect the value. Even an architect or engineer looking at a house to assess its value will not be looking for building faults or checking all the matters he would check as part of a survey on behalf of a purchaser. Lenders advise borrowers not to rely on their “valuation report” and that for the borrowers’ own protection they should get the house surveyed. Bearing in mind the fees payable for lenders’ “valuations” you will appreciate that the examination of the property is fairly superficial. As of now, there has been no reported case in Ireland of a borrower who relied on a lender’s surveyor succeeding in an action when defects are found in a house which the borrower felt the lender’s surveyor should have seen. Several cases have been brought to Court but none of these have succeeded. On the whole, therefore, our advice is that you should place no reliance on the valuation carried out on behalf of your lender. 3. Who do I employ to survey the property for me? You should have the house examined by an architect, structural engineer or building surveyor, provided he or she is experienced in house surveying. People sometimes get a friend who is qualified as an architect/engineer/surveyor to carry out a survey of a property for them sometimes without knowing whether this person has experience of house surveying or practises in an area which gives them the necessary know-how. Others get a tradesman or builder who may or may not have the necessary know-how. A good builder or tradesman with the right experience is probably as good as most surveyors but would not normally furnish a written report and would not usually have professional indemnity insurance. Our advice is to get a person who not just has paper qualifications but has the necessary experience as well. Experience of problems in buildings over a number of years enables professionals who regularly carry out surveys to know what problems to look for in different types of houses. If money were no object, you should have a property looked at by a structural engineer, and an architect (or building surveyor) and a services engineer. In the case of a private residence the cost of such inspections would be considered prohibitive by most people. Furthermore a very comprehensive survey is likely to involve taking up floorboards, and perhaps cutting holes in dry lining or plasterboard and such like, which vendors will rarely allow. One last thing to bear in mind is that if you ask a friend or a family member (whatever the qualifications) and they miss something serious it may be very difficult to take legal action for your loss due to their negligence. The safest course is to use a professional who you could take legal action against without embarrassment. The terms “architect” and “structural engineer” need no explanation. Some explanation may be necessary about “surveyors” because there are so many different categories of surveyor. The best known of these are geo-surveyors or land surveyors who are experts in mapping, quantity surveyors who are experts in the cost of construction schemes, and general practice surveyors who are experts in estate agency, valuation, rent reviews and the development and management of property. Building surveyors offer a specialist service on all matters relating to construction and refurbishment work including the restoration of old buildings and the construction of new. Throughout the rest of this memorandum we refer to “the surveyor” and this expression means the architect, structural engineer or building surveyor. 4. Is a survey really necessary for a modern house? The answer is yes. However, most experienced property professionals consider a very detailed survey unnecessary in relation to a modern house in a building estate, and feel that a more careful examination is more appropriate and necessary in relation to older houses, houses which have been altered and once off houses. Remember that a modern house may already have been altered. It is much more likely that there will be problems with the alterations than with the original structure of the house, so, if a house has been converted or extended it needs to be looked at more closely. It is worthwhile pointing out here that it often takes some years for defects to show up in a new house. A report of building faults in new-build housing noted that:- “Greater efforts are being made to achieve an interesting and distinctive appearance, for example by using projecting windows and porches, and different roof configurations. It is clear that defects tend to increase in proportion to such features…” Once off houses, particularly those built by direct labour, have been the cause of many problems and deserve much closer scrutiny. (See paragraph 13 below.) The latent defects cover given to the purchasers of new houses registered with HomeBond and similar insurers may not adequately cover a subsequent owner particularly if the defect should have been discovered on a reasonable examination by a competent surveyor. This exclusion applies whether you get the property surveyed or not but this is another good reason why a purchaser should get a house surveyed by a competent surveyor. 5. How should I interact a surveyor? If you want to be able to properly rely on a surveyor’s report your instructions to him need to be in writing. However, before attempting to put them in writing you should discuss and agree the general nature of the examination with the surveyor you consult. If you are not sure how to go about this most surveyors will be quite willing to write saying what he or she will do together with any general conditions which they would normally attach to the report. The potential purchaser should read all these very carefully. Some purchasers resent conditions or exclusions. In our experience they are (or should be) intended to help both the surveyor and their client. We also suggest that you discuss and agree the approximate cost beforehand. You may be able to agree a lesser fee on the basis that if the surveyor later expresses disquiet as a result of this examination, you may then sanction further work or further examinations as a result. If problems are discovered, it should not be assumed that the initial fee will cover any further action necessary or arising out of the report. Equally, the surveyor should not assume he has the right to proceed without agreement on further expenditure. Ideally you should arrange to sit down with the surveyor to discuss the report so that he or she can explain any points which are not clear and explain the implications of the findings, the options open to you and the risks involved in purchasing the property. We also advise that you should get a written report. This is particularly important if you intend to rely heavily on the report. It would be very difficult to sue a surveyor successfully on foot of a verbal report if it transpired that some problem was missed. Many surveyors will charge less for a verbal report on the basis that not only does it take time to write a report (which is never a routine operation in a proper inspection) but also they think (probably correctly) that they will incur less legal liability. This almost defeats the purpose of getting a proper survey done in the first place. Purchasers of houses at auction are in a particularly difficult situation in such circumstances. If they do not do their homework they may find out that the cost of getting the house into the condition they want is beyond their resources. If they get all their homework done in advance however, it can be quite costly and this can be very frustrating if the house goes beyond their limit at auction. The only thing worse than being several hundred euros out of pocket with nothing to show for it is bidding higher than the value of the property and buying a building with serious defects. This is an area where the advice of a competent surveyor is invaluable, in trying to strike a balance between checking matters carefully enough without spending too much money. 6. Is it normal for a surveyor’s report to contain provisions absolving him from liability? Will the survey say clearly what is right and what is not? It is indeed normal and quite proper for surveyors to cover themselves against problems being found which they were not allowed look for. For example if the house had fitted carpets and the owner will not allow the surveyor to lift them it would be reasonable to say so in the report. Similarly if a house is furnished and he is not allowed move any of the items of furniture it is reasonable to state this. It all depends on what is reasonable in the circumstances. We would expect a surveyor who gets reasonable access to a house to be able to express a firm view on the overall structure. It is much more difficult to express a firm view in relation to drainage or wiring. A surveyor can flush a toilet and see that the drains seem to be flowing freely but with an old system this does not mean that they will not give trouble. It is also very difficult to test the quality of electric wiring. The surveyor can look at the fittings but this is just a basis for deduction. The fittings or even the fuse box may have been replaced without the wiring having been upgraded. A surveyor is unlikely to save you from problems with wiring or drainage for that reason. Exclusions should make practical common sense in the light of your discussions with the surveyor. If you feel the opinions are unfairly qualified you should talk this over with the surveyor or seek the advice of your solicitor who will be impartial and who will be able to express a view on what is fair and reasonable in the circumstances. A sample set of conditions used by a firm of structural engineers is set out below. Both architects and engineers are generally quite willing to discuss and modify their conditions where appropriate. Structural inspections are concerned with the strength and stability of the basic structure of the building; some aspects of non-structural matters such as services, fittings, completions and finishes, doors and windows, water and weather-tightness, etc. may be noted in passing and commented on but are not dealt with comprehensively. Inspections do not deal comprehensively with the condition of timber and the presence or extent of fungal or insect infestation; a timber treatment specialist’s advice must be sought in relation to these matters. Initial structural inspections are “walkaround” inspections and shall be considered as preliminary only. No opening up to expose the structure and no structural calculations are carried out. Inspections are limited to noting and commenting on visible defects which in our opinion might be symptomatic of structural distress. A more detailed investigation and appraisal can be carried out on request. It is not possible to state that structural elements that are covered, unexposed or inaccessible are free from defects. Planning permission and other building control matters, or fire risk assessment, are not considered. Inspections do not extend to legal rights of ownership such as whether dividing walls or party walls are owned by one side or the other. Dimensions and areas quoted are approximate. Information relating to nonphysical details is given in good faith but is normally obtained by us second-hand and no responsibility is accepted by us for its accuracy or validity. Reports on inspections and appraisals shall be for the private and confidential use of the client for whom the report is undertaken and shall not be reproduced in whole or in part or relied upon by third parties for any use without our express written agreement. This firm provide professional services in accordance with the current Conditions of Engagement of Consulting Engineers, Agreement RA 9101 (“Report and Advisory Work”) published by the Institution of Engineers of Ireland (copy available on request) and we shall not be liable beyond failure to exercise reasonable skill and care." 7. What should be surveyed? It goes without saying that a surveyor should look at everything relevant to the condition of the house and its services in so far as is reasonable in the circumstances. The owners of a house for sale, particularly one in good condition, will not normally allow a surveyor to take up fitted carpets, or floor boards or cut holes in dry lining. Some old houses do not have any access into the roof space so that a surveyor may have no way of getting to see the roof timbers with a view to assessing the house’s condition. Some roofs are more inaccessible than others and the same goes for the pointing of chimneys which cannot be viewed at close quarters. It would be a great help to your surveyor if you arrange beforehand for access to be as free as possible, including arranging ladders and freeing trap-doors for inspection of the attic spaces and/or the roof. Remember you are paying for his or her time and you want it to be used as productively as possible. A surveyor will not normally bring a set of ladders or someone to hold a ladder on an ordinary inspection. Finding that a ladder is needed and none is available may mean a second trip, and more cost. A survey should not be confined just to the building. An experienced surveyor should look at various other things such as, for example:- Are there any indications to show that the property may be liable to flooding, such as proximity to streams, open drains, etc? Do any rights of way affect the property? Gates or gaps in boundary fences which could indicate such rights may be obvious. Whether access to the property is shared with another property. Boundary walls, and particularly any “retaining walls” on the property. If a property has no mains water supply and draws water from a well, it is important to establish whether the well is within the site and if it is shared with anyone else. This should also be brought to the attention of your solicitor so he can see the necessary legal agreements are in place. Where a house is not connected to mains drains, you need to understand what exactly the arrangements are for disposal of sewage and waste water. Most are served by a septic tank/waste disposal unit and its soak pit or percolation area needs to be checked. Many house purchasers do not know what a soak pit or percolation area is, and your surveyor will explain this to you. (See paragraph 8.) Settlement cracks. Many older houses have cracks which are caused by settlement. A surveyor will have the expertise to know which cracks are a cause for concern and if they are what should be done about them. Checking for asbestos, pyrite or other undesirable materials. Checking for what is known as Japanese Knotweed, an invasive plant which is expensive to get rid of and can affect foundations. In conclusion, you should discuss with your chosen surveyor any of the above factors which may be relevant together with other relevant matters, such as the price you are likely to pay and the work or changes you may wish to carry out to the house and whether any other inspections e.g. by a structural engineer are advisable. 8. Septic Tanks or Domestic Waste Water Treatment Plants While in recent years the drainage systems for single houses have become more sophisticated most of the houses which do not have access to a local authority sewer rely on either a septic tank or a sewage treatment plant for drainage. Both will also require a percolation area as well. In its simplest form a septic tank is a tank which removes the gross solids from the sewage by settlement. The effluent leaving the septic tank still contains many of the contaminants of raw sewage and requires further treatment before its disposal can be regarded as satisfactory. For single houses in Ireland the most appropriate effluent treatment is regarded as percolation through a medium, usually soil. During the passage of effluent through the medium, processes take place which reduce the number of soluble and microbiological contaminants. Where soil and ground water conditions are suitable this treatment gives satisfactory results. Where conditions are not suitable then local nuisance or water pollution can occur. The result is the ponding of effluent which give smells and surface water pollution. The old fashioned way of dealing with this effluent was to have it discharged from the septic tank into a pit filled with stones from which the effluent was dispersed by soakage or percolation. This was called a soak pit. The modern practice is to lay distribution pipes into which the effluent can flow and be gradually dispersed into the soil over a larger area. This area is called a percolation area. The pipes are loose jointed so that the dispersal of effluent through the earth takes place over as broad an area as possible. All sorts of factors affect the smooth operation of septic tank and percolation area drainage systems such as proximity to a river, height of the water table, the permeability of the soil etc. If doubts arise as to whether the drainage system is adequate the most important matter you should consider and get your surveyor to advise on is whether a new septic tank and percolation area could be installed within the confines of the site, and of course approximately what this would cost. At least you will then know that if problems develop you should be able to sort them out, even if that is at a price. In recent years more modern treatment plants are almost universally used for treatment of waste water from houses but the basic principles are similar in that they comprise a tank and require a percolation area to disperse the effluent. You should also ask your surveyor to let you know if the septic tank or any part of the percolation area is the required distance from the house, roadway and boundary as laid down in the EPA Code of Practice or is outside the site. If it is you should then pass on this information to your solicitor who will check to make sure that all the necessary legal formalities have been complied with in connection with such arrangements. 9. Registration of Septic Tanks Under the Waste Water Treatment Systems (Registration) Regulations 2012 (S.I. No. 220 of 2012), owners of houses drained by a septic tank are obliged to register it with their local authority. Under section 70D of the Water Services Act 2007 (as inserted by Section 4 of the Water Services (Amendment) Act 2012) a person who sells a property connected to a domestic waste water treatment system (as defined in the 2012 Act) including, but not limited to, a septic tank, will be obliged on the closing of the sale to furnish a valid certificate of registration in respect of the treatment system to the purchaser. A purchaser is obliged to notify the water services authority of the change of ownership after the sale is completed and failure to do so is an offence. Under Section 70C there is an obligation to ensure that the plant does not constitute, and is not likely to constitute, a risk to human health or the environment and in particular it does not create a risk to water, air or soil, or plants and animals. There is also a duty not to create a nuisance through noise and odours. 10. Should a survey include a check on the deed or title maps and the boundaries of the property being purchased? Yes. It is good practice to get copies of the map or maps from the title deeds of the property being purchased and to ask the surveyor to make a general comparison of this with the actual property on the ground. If the exact extent of the property is important (where for example development is planned on part of the property) the maps from the title deeds and the checking of the title against the property on the ground needs to be carried out much more carefully and precisely. In a larger property this can be quite a task involving the use of modern computerised surveying instruments using GPS technology. If the exact extent of the property is of vital importance, the surveyor may advise you to get the site checked by a specialist land surveyor or geo surveyor. If you buy a property on the basis that it has a particular area of ground and this is important you should ask the surveyor to do a careful check of the actual area. 11. If I am buying an apartment is there anything different to look out for? It is very difficult to know where to draw the line in a survey of an apartment. All that is for sale is the apartment itself, whereas most of the important information regarding the apartment depends on the structure of which it forms part and the common areas which it shares with other apartment owners. Normally the structure of the building is owned by the Owners’ Management Company and you will only be buying the internal space, not the structural elements of the apartment. We are advised by experienced surveyors that they personally would not purchase an apartment without having had an opportunity of looking at the structure in general, and, particularly in relation to apartments in larger blocks, making an assessment of its facilities for escape in the event of fire. An overall look at the structure will give an indication as to whether there are any signs of structural distress or damage or of likely major future expenditure – such as that the entire outside needs re-pointing or that there are problems with the roof. In apartment blocks the presence of proper fire doors on apartments and on lobbies with operational door closers, fire stopping where service pipes go through floors, smoke evacuations systems and an operational fire alarm are very important. Solicitors do seek copies of the planning permission and evidence of compliance with building regulations but this is not a substitute for identifying matters obvious from an inspection. 12. You say that alterations to houses are a cause of problems. Why is this? A great many extensions and conversions to houses are carried out without professional help. We suspect that builders carrying on business in this area actively discourage people from concerning themselves with details such as planning, or building regulations with the result that many are carried out without the necessary approvals and often without the assistance of an architect or engineer. The result is that unauthorised extensions and conversions can be a source of considerable trouble on the sale of the property when they and their compliance with planning, building bye-laws or building regulations get scrutinised by professionals, often for the first time. A distinction should be drawn here between problems with the actual building and problems with the paperwork such as lack of the usual paperwork certifying compliance with planning permission and building regulations. Problems with the building can vary from the worst situation where the extension is so hopeless that the best thing to do is to demolish it completely, to the other end of the spectrum where the building faults are small matters which can be rectified by the expenditure of a small amount of money. Problems with the paperwork can usually be overcome if the building itself stands up to scrutiny but, again there is a cost factor in getting an architect to certify the works or perhaps to apply for planning permission to retain an extension. 13. You also say that once off houses are a cause of problems. Why is this? The statistics of problem houses show that a substantial amount of serious problems arise with such houses. Once off houses tend to be built in rural areas by the owners by direct labour who usually employ tradesmen with specialist expertise to deal with different elements. The expertise of the persons who help in the constructions of these houses varies widely and the co-ordination of a person with expertise in building technology is sometimes lacking. Also many are built without the aid of any construction specialist such as an architect or engineer. The situation was improved over the years as lenders insisted on certification of foundations, block work and roof timbers by competent professionals at stages. New building regulations were introduced on the 1st March 2014. This was intended to ensure that it would no longer be possible to build a new house or carry out an extension to a house involving a floor area of 40 square metres, without having an architect, chartered engineer or building surveyor involved both in signing off that the design complies with the building regulations and, when finished, that the completed house does so as well. Most importantly it required the professional to prepare an inspection plan and to carry on inspections to monitor the building at the stages specified in the plan. We believe that this involvement of skilled professionals in the design and monitoring of the building of houses will improve building standards. However as a result of extensive lobbying by the self-building industry the government allowed an opt out for once off houses or extensions to a dwelling. Self building is routine in rural areas and houses built under the opt out are unlikely to benefit from improved building standards. It remains to be seen if availing of the opt out will have any adverse affect on re-sale prices of houses which availed of this opt out. 14. One hears of problems with certificates of compliance for alterations to houses? How do these arise? Where extensions are built without professional help it is not unusual to find that they are not constructed in accordance with best building practice. If the owner extending his or her home is not getting a loan from a lender the question of getting an architect or engineer to certify that the extension or conversion does not require planning permission or has been built in accordance with approved plans does not usually arise until the house is being sold. Even if the owner is getting such a loan the question of certification often does not arise until too late i.e. when the work is nearly finished. Problems with planning, building regulations and certification require careful consideration by a competent architect/engineer/surveyor experienced in such matters in consultation with a solicitor experienced in conveyancing. Whilst all professionals’ certificates are qualified to some degree, the original designers’ affirmations and opinions are by far the most authoritative; anything later is a much more subjective opinion based on far more restricted information and may be found wanting if tested. 15. I have read about radon gas being a problem in houses. Is there anything in particular I need to get the surveyor to advise on in relation to this? Radon gas is a naturally occurring radioactive gas. The gas seeps up through the earth and through the subfloor of homes. It cannot be detected by humans in the house because it has no smell or colour. It can however be detected by specialised equipment, but this takes time, currently three months. Radon gas has been linked to an estimated 200 lung cancer deaths per annum and it is in the interests of anyone buying a house to have regard to it. Areas of high radon concentrations include parts of Wicklow, Carlow, Wexford, Waterford, Galway, Mayo and Sligo, but no county is completely free of it. Since July 1998, builders have been obliged to install a membrane over the footprint of each new building. This is to prevent radon gas getting into the house from the ground. In addition they are obliged to provide for a means of radon extraction from the sub-floor (under the membrane) by means of a sump or sumps with connecting pipework to an access point outside the house. A post construction test for radon is strongly recommended. If you are buying a site you should make sure that a radon barrier and the necessary sump or sumps and pipework are installed at the appropriate stage because it is just not practicable to retro-fit a radon barrier. If you are buying a house and intend to carry out renovations to it you should ensure to incorporate radon protection which is not an expensive job. Current practice is to install a radon sump plus mechanical ventilation from it. You or your surveyor should check the map available from the Radiological Protection section of the EPA and find out whether the property you are interested in is in a high risk area. You should also ask the seller if he had the property tested for radon gas. You can apply to the EPA and they will carry out a radon measurement of a home for a modest fee. This can be arranged online. It involves having a small neat device a bit bigger than a match box in the house for three months and then returned for analysis. If the vendor had the house tested you should ask for a copy of the test results. In theory, if you are buying a house which was built since 1998, you should have nothing to worry about on the assumption that the builder installed the radon barrier properly with the necessary sump. However, there is no way of knowing quickly if the barrier is installed or effective because it will be completely inaccessible. A radon barrier can reduce radon gas by 99% but the reduction can be as low as 60%. The probability is that the only way of checking would be to have a radon test done but currently this will take three months. If you are buying a house and it is in a high risk area and neither you nor the vendor are in a hurry, you should consider whether you should make it a condition of the contract that a test be carried out and if the test is not well within the official safe levels for houses be in a position to withdraw from or renegotiate the deal. The reality is that this is usually just not practicable because of the delay factor. However any purchaser should seriously consider what it would cost to install a radon barrier and sump apparatus in a property particularly if they are carrying out any renovations. As soon as you move into a new house you should have it checked for radon gas. Copyright © Helen Sweeney, McKeever Solicitors, 21st March 2018. This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further information, please contact Helen Sweeney or Paddy Kelly. https://www.mckr.ie/insights/news-and-publications/do-i-need-a-survey-to-buy-an-apartment-or-house https://www.mckr.ie/insights/news-and-publications/do-i-need-a-survey-to-buy-an-apartment-or-house Wed, 21 Mar 2018 00:00:00 +0000 www.mckr.ie Collared: Corporate Crime in Ireland Update The Criminal Justice (Corruption Offences) Bill 2017 was published late last year by the Minister for Justice and Equality as part of the Government’s White Collar Crime package and is expected to be enacted in late 2018 with the intention of modernising the existing anti-bribery and corruption framework. The purpose of the legislation may be viewed as twofold. The first is to consolidate the numerous existing Statutes such as the Public Bodies Corrupt Practices Act 1889, the Prevention of Corruption Act 1906 and Prevention of Corruption (Amendment) Act 2010. The second is to implement the findings of the Mahon Tribunal which published its final report in 2012 in relation to certain planning matters and payments. Background The Criminal Justice (Corruption Offences) Bill 2017 was published late last year by the Minister for Justice and Equality as part of the Government’s White Collar Crime package and is expected to be enacted in late 2018 with the intention of modernising the existing anti-bribery and corruption framework. The purpose of the legislation may be viewed as twofold. The first is to consolidate the numerous existing Statutes such as the Public Bodies Corrupt Practices Act 1889, the Prevention of Corruption Act 1906 and Prevention of Corruption (Amendment) Act 2010. The second is to implement the findings of the Mahon Tribunal which published its final report in 2012 in relation to certain planning matters and payments. Who does this apply to? The legislation will apply to bodies corporate, state bodies and civil officials alike. Furthermore, it will apply to Irish residents and citizens and registered companies operating within the State. Therefore, Irish companies with an overseas office as well foreign companies operating in Ireland are both within the scope of the legislation. What constitutes a bribe? A bribe is referred to throughout the legislation as “a gift, consideration or advantage”. It may be received directly or indirectly, individually or with another person. There is no requirement for the bribe to have actually been made. The offering or agreeing to give a bribe will constitute an offence under the legislation. Similarly, it will be an offence for the bribe to be accepted or agreed to be accepted. Therefore, bribery and an attempt to commit or accept bribery, will constitute an offence under this legislation. New Offences One of the key features of the legislation is the creation of a new offence of “trading in influence”. This occurs if a person either directly or indirectly corruptly offers, gives or agrees to give a bribe to an official as a means of influencing the official’s decision making. This would include situations where a person offers a third party a bribe with a view to that person exerting influence over the acts of an official. The inclusion of the term “corruptly” is particularly noteworthy. “Corruptly” has been given a meaning which, while not exhaustive, is open to interpretation in terms of the offence to which it relates. It includes the making of false statements and the withholding, concealing, altering and/or destroying of information with a view to influencing another person. It is arguable that the broad definition of this term may give rise to uncertainty in its future application. The legislation also creates the offence of “active” and “passive bribery”. “Active bribery” will occur where a person offers, gives or agrees to give a bribe to a person as an inducement or reward for them doing something in relation to their office, employment position or business. “Passive bribery” on the other hand will occur where a person accepts or agrees to accept a bribe. This offence applies to both the private and public sectors. It is important to note that if it is proven that the bribe was given to an official by a person with an interest in the discharge of the official’s duty, then it will be presumed to have been given and received corruptly as an inducement for the official to perform a particular act unless the contrary is proven. This presumption of guilt will also be present in situations where the official performs or omits to perform a function that gives rise to an undue benefit or advantage to the person who gave the gift. Other offences under the legislation include the use of confidential information by an Irish official by virtue of his position for the purpose of obtaining a gift, consideration or advantage as well as the giving of a gift, consideration or advantage for the purposes of facilitating corruption. Implications for Companies A body corporate will be held criminally liable if one of its officers or employees engages in corrupt activity as a means of obtaining or retaining business. Therefore, it is paramount that companies take steps to ensure compliance with the new legislation, e.g. ensuring that an up to date anti-bribery and corruption policy is in place in respect of the company’s dealings with existing and prospective clients. This would include hospitality and social events as well the company’s relationship with third parties. Companies should carry out formal due diligence with all agents acting on behalf of the company as well as commercial third parties. It is also prudent to insert warranties in agency and third party contracts in relation to conduct and dealings with existing and prospective clients. Should a company be accused of committing an offence under the legislation, its only defence will be its ability to demonstrate that all reasonable steps were taken and proper due diligence was carried out to prevent the alleged offence. Therefore, it is essential that companies carry out due diligence in respect of their internal and external practices and procedures with regard to client entertainment and networking generally. A company whose officers have engaged in corrupt activity as a means of obtaining or retaining business or gaining an advantage for the body corporate will be liable to a Class A fine (€5,000) upon summary conviction or an unlimited fine upon indictment. Individuals convicted under the legislation can be liable to a maximum sentence of 10 years imprisonment and/or unlimited fines. In certain circumstances, the person can be ordered to forfeit their position as well as be prohibited from holding or occupying any office in the future. An order of this nature may be made if the court considers it in the interest of maintaining or restoring public confidence in the public administration of the State as well as being in the interest of justice. Copyright © Alban O’Callaghan, McKeever Solicitors, 4th January 2018. This article is a general recital of the new law on the subject and is not intended to be definitive or exhaustive. Specific legal advice must be sought on a case by case basis. For further information, please contact Alban O’Callaghan or Andrew Clarke. https://www.mckr.ie/insights/news-and-publications/collared-corporate-crime-in-ireland-update https://www.mckr.ie/insights/news-and-publications/collared-corporate-crime-in-ireland-update Thu, 04 Jan 2018 00:00:00 +0000 www.mckr.ie 10 Steps to Buying a House McKeever Solicitors co-hosted a Mortgage Information seminar with Bank of Ireland at our offices in 5 Harbourmaster Place on the 24th November 2017. Following a presentation by Bank of Ireland mortgage team, our guests had the opportunity to discuss the conveyancing process with our property team. The following is a number of guidelines for first time buyers on purchasing a property. McKeever Solicitors co-hosted a Mortgage Information seminar with Bank of Ireland at our offices in 5 Harbourmaster Place on the 24th November 2017. Following a presentation by Bank of Ireland mortgage team, our guests had the opportunity to discuss the conveyancing process with our property team. The following is a number of guidelines for first time buyers on purchasing a property. 1. Choose a Property You should build up a good relationship with the Estate Agents in the area that you are interested in. They will help you to locate properties that may be coming to the market shortly so that you can get in there early! Once you agree the purchase of your chosen property, you pay a booking deposit to the Estate Agent to secure the sale to you. This is a refundable deposit. The Estate agent will arrange for contracts and title documentation to be issued by the vendor’s solicitors to us.   2. Nominate a Solicitor We advise that you arrange at an early stage to nominate a solicitor to act for you and obtain an estimate of proposed fees and outlay. Pursuant to the money laundering regulations we will require all clients to prove their identity and verify their address. McKeever, acting as your solicitors, will review and investigate the property title and planning documents and ensure that the property has good marketable title. The day that you buy is the day that you sell! 3. Arrange a Structural Survey You should obtain a structural survey report of the building from a suitably qualified Architect/Engineer/Surveyor, regardless of whether the property is new or old. You purchase the property in its current state at your own risk, “caveat emptor” (“buyer beware”). 4. Signing of Contracts Once we are satisfied that the title and planning to the property is in order and you are satisfied with the structural survey, we will arrange for you to attend at our offices to review and sign the contracts and any loan documentation. There is no binding contract until a written contract has been signed by both the vendor and the purchaser, a 10% deposit is paid and the contracts are exchanged. The balance deposit is paid when you sign the contract (less any booking deposit you have paid to the auctioneer). This means that you can turn back at any stage up until this point! The completion date – when you get the keys- will be proposed at this contract stage but it may be varied by the vendor. The completion date will be ultimately agreed between the parties through their solicitors. 5. Insure Your Property When you sign the contract, the beneficial interest in the contract passes to you and legal interest remains with the vendor until the completion date. You should put your buildings insurance policy in place when you sign the contract for the full reinstatement value of the house. If you are purchasing an apartment the property will already be covered by the block insurance policy of the Management Company. 6. The Road to Completion… Once you have signed your contracts, we prepare to complete the sale. You will usually receive your keys approx. 6 weeks from the date of signing contracts. This timeline may vary depending on title issues that may need to be resolved by the vendor, the sale of another property being completed or other factors. As your valued Solicitors, we will endeavour to keep you updated as regards the completion date and finalise the purchase as quickly as possible. 7. Require a Mortgage? Please check with your bank or mortgage broker that you have completed all the banks pre draw down requirements of a non-legal nature so that loan approval and release of funds will not be delayed. 8. Costs Solicitors professional Fees (subject to VAT) Stamp Duty (currently 1% up to €1m and 2% thereafter) Outlays- search fees, registration fees Surveyor’s Fees Buildings and contents insurance Local Property Tax/Management Company Fees 9. Collect Your Keys On the completion date, the balance purchase price and apportionment of LPT and service charges are transferred to the vendor’s solicitors. Once the final title documents are with us and in order we will authorise release of these funds to the vendor. In turn the vendor’s solicitors will release the keys via the estate agent. There is no requirement for you to attend our office on the completion date. We will contact you once the sale has completed and let you know when to collect the keys to your new home from the estate agent. 10. Move In! Copyright © Helen Sweeney, McKeever Solicitors, 24th November 2017. This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further information, please contact Helen Sweeney or Robert Browne. https://www.mckr.ie/insights/news-and-publications/10-steps-to-buying-a-house https://www.mckr.ie/insights/news-and-publications/10-steps-to-buying-a-house Fri, 24 Nov 2017 00:00:00 +0000 www.mckr.ie Taxation of Spouses Contributory Old Age Pension The Tax Appeal Commission published a decision on 4th September 2017 that Section 14 of the Social Welfare and Pensions Act 2007, mandating the increased pension to be paid directly to the spouse had the effect of bestowing the beneficial entitlement of the pension to the spouse. The Tax Appeal Commission published a decision on 4th September 20171 that Section 14 of the Social Welfare and Pensions Act 2007, mandating the increased pension to be paid directly to the spouse had the effect of bestowing the beneficial entitlement of the pension to the spouse. The facts (briefly) were that the appellant was entitled to a Contributory Old Age Pension along with an increase to that pension as he had a Qualified Adult (his wife). The increased pension was paid directly to his wife, a procedure formalised in the 2007 Act. In 2013 Revenue refused to apply the standard rate of tax to the increased pension payment and also denied the entitlement to the Employee Tax Credit on the grounds that the pension did not arise to the Appellant’s spouse but that it applied to the husband. Revenue sought to tax the benefit based on the husband’s allowances without reference to the wife’s allowance. As a consequence of this decision, the standard rate band should be increased. This decision has the effect of reducing the tax payable on such pension payments2. The matter has however been appealed to the High Court. This article is a general recital of the decision on the subject and is not intended to be a complete statement of the Law. Specific legal advice must be sought on a case by case basis. For further information please contact Robert Browne. 1 Section 14, Social Welfare and Pensions Act 2007 2 Tax Appeals Commission determination regarding Employee Tax Credit https://www.mckr.ie/insights/news-and-publications/taxation-of-spouses-contributory-old-age-pension https://www.mckr.ie/insights/news-and-publications/taxation-of-spouses-contributory-old-age-pension Fri, 20 Oct 2017 01:00:00 +0100 www.mckr.ie Construction Industry Regulation Update The General Scheme of the Building Control (Construction Industry Register Ireland) Bill 2017 is expected to be implemented in January 2018 under which all building contractors and sub-contractors operating in Ireland will be required to register with the Construction Industry Register Ireland (CIRI). This Register was established on a voluntary basis in March 2014 by the Construction Industry Federation as a means of increasing regulation of the building sector and provide assurance to consumers who engage the services of builders and contractors. The General Scheme of the Building Control (Construction Industry Register Ireland) Bill 2017 is expected to be implemented in January 2018 under which all building contractors and sub-contractors operating in Ireland will be required to register with the Construction Industry Register Ireland (CIRI). This Register was established on a voluntary basis in March 2014 by the Construction Industry Federation as a means of increasing regulation of the building sector and provide assurance to consumers who engage the services of builders and contractors. By accessing the register online, members of the public are able to view details of registered contractors, including their category of registration i.e. house builder, plasterer, civil engineer etc. Compulsory registration with CIRI will serve as an essential measure for consumer protection by ensuring quality and competence. Analysis (RIA) conducted by the Department of Housing has noted that public confidence in the construction industry will be restored following the “legacy of building failures” over recent years such as Long Boat Quay, Carrickmines Green and Beacon South Quarter. Registered contractors will be required to comply with a statutory code of conduct which will cover matters such as professionalism, competence, advertising and record keeping and quality customer service. Registered contractors will be required to meet annual Continuous Professional Development requirements in addition to making a statutory declaration that they have not been convicted under health and safety or building control legislation. It will be an offence under the legislation for a contractor to undertake building works in the State without being registered with CIRI. The penalty for doing so will be a Class A fine and/or a maximum of 12 months’ imprisonment. It has not yet been determined what constitutes a Class A fine. The new legislation provides for a complaints procedure against registered contractors. Members of the public who have engaged the services of a registered contractor can make a written complaint to the Admissions and Registration Board citing areas of improper conduct, poor professional performance and breach of registration requirements. The legislation also sets out six specific grounds on which a complaint may be made, ranging from a contractor undertaking a type of work for which they are not registered or are not exempt from registration, to failure of the contractor to discharge the level of competence required. The Admissions and Registration Board will have the power to conduct investigations into the registered contractor’s alleged misconduct and may impose a range of punitive measures ranging from advising the registered contractor in respect of the matter complained of to removing their name from the register completely. Registered contractors whose names have been removed from the Register will be able to apply for it to be restored upon direction by the Board only, which may include conditions on the restoration. Registration is mandatory for all builders and contractors, including sole traders. The cost of doing so is expected to be €600 (plus VAT). However, the Department of Housing’s RIA notes that once the register is in place, economies of scale will serve to reduce the cost of registration. Copyright © Alban O’Callaghan and Andrew Clarke, McKeever Solicitors, 6th October 2017. This article is a general recital of the decision on the subject and is not intended to be a complete statement of the Law. Specific legal advice must be sought on a case by case basis. For further information, please contact Andrew Clarke or Alban O’Callaghan. https://www.mckr.ie/insights/news-and-publications/construction-industry-regulation-update https://www.mckr.ie/insights/news-and-publications/construction-industry-regulation-update Fri, 06 Oct 2017 01:00:00 +0100 www.mckr.ie Monitoring of Employees Communications On the 5th September 2017, the European Court of Human Rights delivered judgment in the case of Barbulescu v Romania which is set to have far reaching consequences for employers. The decision comes against a backdrop of litigation instituted by the appellant, Mr Bogdan Mihai Barbulescu, in 2007 against his employer following their monitoring of personal communications that he sent over an instant messaging service to his brother and fiancé. Following the appellant’s complaint that his employer’s actions constituted a criminal offence, his contract of employment was terminated. On the 5th September 2017, the European Court of Human Rights delivered judgment in the case of Barbulescu v Romania [61496/08] which is set to have far reaching consequences for employers. The decision comes against a backdrop of litigation instituted by the appellant, Mr Bogdan Mihai Barbulescu, in 2007 against his employer following their monitoring of personal communications that he sent over an instant messaging service to his brother and fiancé. Following the appellant’s complaint that his employer’s actions constituted a criminal offence, his contract of employment was terminated. Case Background The appellant was a sales engineer in the Bucharest office of a Romanian private company between 2004 and 2007. As part of his duties, he had been requested by his employer to create an instant messaging account on Yahoo Messenger as a means of facilitating customer enquiries. The appellant already had a personal instant messaging account with Yahoo at this time. Between the 5th and 13th July 2007, the employer recorded the appellant’s communications on the messaging service, following which the appellant was summoned by his employers who contended that sending personal messages using company resources constituted a breach of the company’s internal regulations. Company regulations stated that personal use of computers was strictly forbidden. These regulations did not go as far as to state that the employer could actually monitor the employee’s communications. An information notice was then circulated to employees of the Bucharest office on the 3rd July 2007 which stated that the internet was not to be used for matters unconnected to work or the employee’s duties. The notice stated that the employer has a duty to supervise and “carefully” monitor employees’ work which may result in punitive measures being taken against the employee. On the 13th July 2007, the employer summoned the appellant to account for his personal use of the messaging service. The employer had compiled a forty-five-page transcript of the appellant’s instant messaging conversations with his brother and fiancé, some of which were intimate in nature. On the 1st August 2007, the appellant’s contract of employment was terminated. Article 8 of the European Convention of Human Rights Article 8.1 of the ECHR states that “everyone has the right to respect for his private and family life, his home and his correspondence”. The appellant brought an action before the Bucharest County Court arguing that an employee’s telephone line and email communications in the workplace came within the scope of “private life” and “correspondence” and were therefore protected under Article 8 of the European Convention of Human Rights (“the Convention”). The County Court dismissed his application and deemed the employer’s decision to dismiss him to be lawful. He appealed this to the Bucharest Court of Appeal on the same grounds, additionally claiming that the information notice that had been circulated on the 3rd July 2007 gave no indication that the employer could monitor employee’s communications. The Court of Appeal upheld the initial findings and went on to hold that “the employer has a right and duty to ensure the smooth running of the company and, to that end, [is entitled] to supervise how its employees perform their professional tasks”. The Court of Appeal went on the hold that “it cannot be maintained that this legitimate aim could have been achieved by any other means than by breaching the secrecy of his correspondence”. The appellant appealed this matter before the Fourth Section of the European Court of Human Rights. On the 12th January 2016, it was held by six votes to one that there had been no violation of Article 8 of the Convention. The matter ultimately came before the Grand Chamber (“the Chamber”) of the ECHR. The Chamber considered the interpretation of “private life” and how it may extend to include professional activities or activities taking place in a public context. The Chamber stated that restrictions on an individual’s professional life may fall within the scope of Article 8 if the restrictions have repercussions on the manner in which the individual constructs his or her social identity by developing relationships with others. The Chamber noted that it is in the course of working life that an individual has significant, if not the greatest, opportunity to develop relationships with the outside world. It followed that communicating through an instant messaging service from the workplace is but one of the means through which an individual can lead a private social life. Furthermore, “correspondence” can include telephone calls and e-mails, even if they have been sent from a business premises. The Chamber held that the employee’s messages that he sent on the instant messaging network from his work computer were therefore within the scope of Article 8 of the Convention. Compliance with Article 8 In assessing the employer’s actions and whether they complied with Article 8 of the Convention, the appellant submitted that the nature of the instant messaging service in question was for personal use, despite the employer deciding it to be used for professional purposes. Furthermore, he argued that the messages in question were part of a “small harmless conversation” from which no profit was derived and no damage was caused to the employer. He also submitted that the line between personal and professional life can be unclear given modern day working conditions. By International and European standards, the data subject must be informed before any monitoring activities take place. It was argued on behalf of the respondent that the employees had in fact been notified by the employer of their computers being monitored. The Chamber accepted that the appellant was aware of the ban on personal internet use as prescribed in the company’s internal regulations, but it was unclear whether the appellant was on notice of the monitoring in advance of it actually taking place. The appellant argued that he received no warning of internet use and that if he had, he would not have disclosed such personal information on the instant messaging service. While it was accepted that the recording of the communications occurred between the 5th and 13th July 2007, it could not be ascertained with any degree of certainty when the appellant had become familiar with the information notice in which the employer notified the work force of the monitoring activities. The Chamber concluded that it was not apparent that the appellant had been notified of the extent or nature of the monitoring or that the employer could view the actual content of the communications in advance of it actually taking place. It was ultimately held that the domestic courts had failed to determine whether the appellant had received prior notification that his communications on Yahoo Messenger would be monitored as well as the degree of intrusion into the appellant’s private life and correspondence, specifically whether a less intrusive method of supervision could have been adopted by the employer. Therefore, there had been a violation of Article 8 of the Convention. However, the Chamber did not make an award of damages. It held that the National Courts had failed to strike an adequate balance between the appellant’s right to a private life and correspondence, and the employer’s interests. This does not provide a causal link between the violation of Article 8 and any financial damage suffered by the appellant. Implications for Employers This decision of the Chamber has safeguarded the employee’s right to privacy while curtailing the circumstances under which employers may seek to implement restrictive measures on employees. On this point, the Chamber held that an employer’s restrictions cannot reduce private social life in the workplace to zero. Restrictions may only be so far as necessary so as to prevent damage being incurred by the company such as damage to IT systems, illegal activities online and trade secrets being disclosed. Safeguards on such restrictions include the necessity to notify the employee of such a restriction and that it be proportionate in so far as the amount of intrusion into the employees’ privacy is concerned. In other words, is a less intrusive method of employee supervision available? There must also be sound and legitimate business reasons for the need to do so. Furthermore, the potential consequences of breaching a company’s internal regulations needs to be brought to the employee’s attention in advance as must the punitive measures and the procedures to be followed. In light of this decision, employers need to review their policies and procedures currently in force and ensure that all they are clearly set out and understood by their employees. Copyright © Alban O’Callaghan, McKeever Solicitors, 19th September 2017. This article is a general recital of the decision on the subject and is not intended to be a complete statement of the Law. Specific legal advice must be sought on a case by case basis. For further information, please contact Robert Browne or Alban O’Callaghan. https://www.mckr.ie/insights/news-and-publications/monitoring-of-employees-communications https://www.mckr.ie/insights/news-and-publications/monitoring-of-employees-communications Tue, 19 Sep 2017 01:00:00 +0100 www.mckr.ie Effective Ways of Reducing Inheritance Tax Capital Acquisitions Tax (CAT) is payable on a gift or inheritance received by a beneficiary from a “donor”. There are several ways donors can be efficient and help to reduce CAT payable by their beneficiaries. Capital Acquisitions Tax (CAT) is payable on a gift or inheritance received by a beneficiary from a “donor”. There are several ways donors can be efficient and help to reduce CAT payable by their beneficiaries. The following are some ideas which can assist in this tax planning exercise: Transfer or hold property in joint names as property in joint tenancies can be passed, on the death of one of the parties, to the other party/ies named on title tax free; Make a will based on your wishes, but also based on the tax-free thresholds available to your beneficiaries in the will; Be generous to your other half in your will as assets of any kind can be passed tax free to your surviving husband, wife or civil partner; Know the criteria for the various CAT reliefs available and utilise them where applicable e.g. Agricultural, Business, Favourite Nephew/Niece, Dwelling-House Relief; Take out a Life Assurance Policy, known as a section 72 Policy, to cover the CAT payable by your beneficiaries; Consider setting up a Trust, particularly where the beneficiaries are minors; Cashable assets are very important as this helps beneficiaries pay off the CAT liability without needing to get loans etc.; Every year you can give a gift of €3,000 tax-free blood relation or not. This will decrease the CAT payable. Copyright © McKeever Solicitors, 10 July 2017. This article is a general review and is not intended to be a complete statement of the law. Specific legal advice must be sought in every case. For further information on Wills, Probate and Estate Planning, please contact Helen Sweeney. https://www.mckr.ie/insights/news-and-publications/effective-ways-of-reducing-inheritance-tax https://www.mckr.ie/insights/news-and-publications/effective-ways-of-reducing-inheritance-tax Mon, 10 Jul 2017 01:00:00 +0100 www.mckr.ie Recent Work: Voxpro Headquarters We recently acted for the purchaser of the high profile Voxpro Headquarters in Loughmahon Technology Park, Cork comprising 120,000 square feet. We recently acted for the purchaser of the high profile Voxpro Headquarters in Loughmahon Technology Park, Cork comprising 120,000 square feet. Our client currently manages over €1.3 billion of real estate across Europe. It raises money from private investors and has thousands of shareholders from across the globe. It plans to invest more than €450 million in Europe in 2017 and is currently analysing other opportunities in Ireland. The reported €17.5 million purchase was led by our Commercial Property department. Copyright © McKeever Solicitors, 23rd June 2017. For further information please contact Helen Sweeney. https://www.mckr.ie/insights/news-and-publications/recent-work-voxpro-headquarters https://www.mckr.ie/insights/news-and-publications/recent-work-voxpro-headquarters Fri, 23 Jun 2017 01:00:00 +0100 www.mckr.ie Change to Dwellinghouse Relief Exemption As of the 1st January 2017 major changes for gift and inheritance tax relief on dwelling houses were introduced. As of the 1st January 2017 major changes for gift and inheritance tax relief on dwelling houses were introduced. Gifts A gift of a dwelling house is now only CAT tax exempt where it is made to a dependent relative. A dependant relative includes a parent, grandparent, child, grandchild, brother, sister, uncle, aunt, niece or nephew of the disponer or their spouse/civil partner who is permanently and totally incapacitated from maintaining themselves, or age 65 years and over. Where this relief applies the disponer does not have to reside in the property at the date of the gift. Inheritance The CAT free inheritance of a dwelling may apply if the following conditions are met: The person leaving the legacy must have occupied the dwelling as their main residence on the date of death. The person inheriting the house must have continuously occupied the dwelling as their main residence for 3 years prior to the inheritance; and The beneficiary must not be entitled to or have an interest in any another dwelling at the date of the inheritance. Notably, they are permitted to be part owner of the dwelling they are inheriting. Following the inheritance the beneficiary must occupy the dwelling (or, if sold, the replacement dwelling) as their main residence for 6 years after the inheritance subject to some exceptions, including age or infirmity. Copyright © McKeever Solicitors, 15 June 2017. This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. If you would like more detailed information on this topic please refer to Gains, gifts and inheritance on the revenue.ie website or you can contact Helen Sweeney. https://www.mckr.ie/insights/news-and-publications/change-to-dwellinghouse-relief-exemption https://www.mckr.ie/insights/news-and-publications/change-to-dwellinghouse-relief-exemption Thu, 15 Jun 2017 01:00:00 +0100 www.mckr.ie Review of Time Limits on Tax Avoidance Matters The Supreme Court delivered a decision in the case of Droog v Revenue Commissioners on 6th October 2016, and held that the 4 year time limits for the process of Revenue “forming an opinion” under Section 811 of the Taxes Consolidation Act 1997 applied. The Supreme Court delivered a decision in the case of Droog v Revenue Commissioners on 6th October 2016, and held that the 4 year time limits for the process of Revenue “forming an opinion” under Section 811 of the Taxes Consolidation Act 1997 applied.1 Section 8112 Section 86 of the Finance Act 19883 introduced general anti-avoidance provisions. “Tax avoidance” involves structuring ones affairs in a manner which minimises tax in what might be described as a “contrived manner”. The provisions seek to strike a balance by allowing tax payers a reasonable opportunity to conduct genuine economic activity in a tax efficient manner. Part 41 TCA [Sections 950-959 TCA] Part 41 is the legislative basis for the Self-Assessment system of tax, covering persons liable to Income Tax, Corporation Tax and Capital Gains Tax for tax years up to and including 2012. Sections 955 and 956 are designed to prevent the re-opening of tax affairs in respect of these types of tax outside a 4 year period, except in circumstances where the original return was, or was reasonably suspected to be, fraudulent or negligent. The Droog Case concerned the tax year 1996/1997. Mr. Droog claimed relief of approximately £50,000 in respect of a share of losses of a film partnership. On the 22nd February 2007, Revenue issued an opinion under Section 811(6) of the TCA, claiming that the transaction was a tax avoidance transaction within the meaning of Section 811. S955 (1) allows an inspector “at any time” to amend an assessment previously issued. However, it is expressly subject to subsection 2, which states “where a chargeable person has delivered a return for a chargeable period and has made in the return a full and true disclosure of all material facts necessary for the making of an assessment for the chargeable period, an assessment for that period or an amendment of such an assessment shall not be made on the chargeable person after the end of the period of 4 years … “ The Appeal Commissioner conducted an initial hearing to deal solely with the question of the time limit and issued a determination that the four year time limit set out in Sections 955 and 956 of the TCA, applied to the formation of an opinion under Section 811, so that the opinion in this case was out of time. The Supreme Court upheld the Appeal Commissioner’s finding and concluded that Revenue were out of time from pursuing the matter. The decision is of relevance to cases where notices of opinion issued outside the 4 year time limit. The impact of the decision is of no relevance to transactions after 19 February 2008, given the changes effected by S811A and S811 C, which expressly exclude the provisions of Part 41. Copyright © McKeever Solicitors, 12 April 2017. This article is a general recital of the decision on the subject and is not intended to be a complete statement of the Law. Specific legal advice must be sought on a case by case basis. For further information please contact Robert Browne or Ciara Meskell. 1 Revenue Commissioners v Droog – Supreme Court Judgment, An tSéirbhís Chúirteanna, Courts Service, Ireland. 2 Taxes Consolidation Act, 1997 – electronic Irish Statute Book (eISB). 3 Finance Act, 1989 – electronic Irish Statute Book (eISB). https://www.mckr.ie/insights/news-and-publications/review-of-time-limits-on-tax-avoidance-matters https://www.mckr.ie/insights/news-and-publications/review-of-time-limits-on-tax-avoidance-matters Wed, 12 Apr 2017 01:00:00 +0100 www.mckr.ie The Validity of Security On the 9th of February 2017 the Court of Appeal gave Judgement on an issue concerning the non-registration by a Bank of a lien arising from an equitable deposit of title deeds, in accordance with Section 73 of the Registration of Deeds and Title Act 2006 (“the 2006 Act). The Bank had failed to register its lien within the required 3 year period and it was argued by its customer appealing against an Order made in the High Court in favour of the Bank, granting a Well Charging Order and Order for Sale over the secured properties, that therefore, the security had lapsed and could not be enforced. On the 9th of February 2017 the Court of Appeal gave Judgement on an issue concerning the non-registration by a Bank of a lien arising from an equitable deposit of title deeds, in accordance with Section 73 of the Registration of Deeds and Title Act 2006 (“the 2006 Act). The Bank had failed to register its lien within the required 3 year period and it was argued by its customer appealing against an Order made in the High Court in favour of the Bank, granting a Well Charging Order and Order for Sale over the secured properties, that therefore, the security had lapsed and could not be enforced. The Bank’s position was, that the non-registration did not affect the validity of the security held, but rather affected the order of priority with other encumbrancers. In effect, other encumbrancers, not being on notice of the Bank’s security because of its non-registration, would achieve priority if their security was registered prior to the Bank’s security. It was pointed out to the Court that there was nothing within the 2006 Act to suggest that the security was invalid if not registered within the 3 year period. After deliberation, the 3 judge Court found that the non-registration of the Bank’s security within the required 3 year period did not render the security invalid but did have application in so far as other encumbrancers were concerned in dealing with the order of priority. In the present case the Bank’s lien had been registered following the expiry of the 3 year period and prior to the registration of any other security on the properties. The appeal was unanimously dismissed with costs. Copyright © Alban O’Callaghan, McKeever Solicitors, 27 February 2017. This article is a general recital of the decision on the subject and is not intended to be a complete statement of the Law. Specific legal advice must be sought on a case by case basis. For further information please contact Gerard Walsh or Alban O’Callaghan. https://www.mckr.ie/insights/news-and-publications/the-validity-of-security https://www.mckr.ie/insights/news-and-publications/the-validity-of-security Mon, 27 Feb 2017 00:00:00 +0000 www.mckr.ie What is an Enduring Power of Attorney and do I need one? An Enduring Power of Attorney (EPA) is a document that allows you to plan for the management of your future in the event that you become mentally incapacitated e.g. by way of stroke, dementia, Alzheimer’s etc. An EPA enables you to choose a person that you trust to manage your personal and financial affairs. An Enduring Power of Attorney (EPA) is a document that allows you to plan for the management of your future in the event that you become mentally incapacitated e.g. by way of stroke, dementia, Alzheimer’s etc. An EPA enables you to choose a person that you trust to manage your personal and financial affairs. Advantages of creating an EPA: You can appoint one or two members of your family or close trustworthy persons to step into your shoes to look after your property and financial affairs and make certain personal care decisions on your behalf. The EPA document sets out detailed information as to your wishes and specific requirements. It is a less expensive and an efficient manner letting you decide who will control your assets and personal affairs if you are not able. Unlike a general power of attorney, an enduring power of attorney will only come into effect in the event that your doctor certifies you as being mentally incapable of manging your own affairs. The EPA may never come into force should you remain in control of your affairs, it is a preventative measure only and there are a number of safeguards to protect you. I’m still young – I don’t need to make an EPA yet? There may be less obvious need to make an enduring power of attorney when compared with someone who is of advancing years and showing some signs of memory loss. However you can never tell when an accident might occur or an unexpected illness and at that stage it may be too late. According to the Alzheimer Society of Ireland1: The expected number of people to have Alzheimer’s by 2036 is to be in excess of 104,000 unless there is a medical breakthrough. Currently 4,000 people in Ireland under the age of 65 have early onset Alzheimer’s. Creating an EPA: An EPA is created by entering into a written deed of appointment pursuant to the Powers of Attorney Act 1996. In creating an EPA you may choose one attorney or more than one to act on your behalf. You may also appoint an attorney or attorneys to act in the event that the original attorney is unable or unwilling to act. Your GP must confirm that you are capable of entering into an EPA and we as your solicitors must also be satisfied that you understand the document you are signing. You must give notice of the execution of the enduring power of attorney as soon as practicable to at least two persons called ‘notice parties’ who keep the attorney(s) in check. No action is undertaken without notice to you. The notice parties are notified when the EPA is signed and when the attorney intends to register it. The Act requires notices to be served at every step of the process to ensure that you and your notice parties are informed of the progress of the EPA and its registration. An Enduring Power of Attorney creates peace of mind. It allows you to maintain control of your affairs until such time as you may become unable to do so yourself through mental incapacity. What happens if I do not have an EPA: In the event that you become incapacitated through mental illness and you do not have an EPA, an application will need to be made by your family to make you a Ward of Court. The Wards of Court process is a court based process by application through the High Court Wards of Court office. It can take between 8 months to one year to have a ward of court application made. Your family will have no access to your assets for this period as no bank will allow anybody to deal with your bank accounts except you. Your assets will be frozen until you are made a Ward of Court and then the Accountants Office in the High Court will hold your money on your behalf. The Ward of Court office will have power over your assets as to how your money should be spent and your needs attended to. They will get the advices of your family however you will have no control. It is an extremely lengthy and expensive process. If you wish to discuss making an EPA please contact us and we would be delighted to advise you and discuss further. Copyright © Helen Sweeney, McKeever Solicitors, 18th January 2017. This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further information, please contact Helen Sweeney. 1 The Alzheimer Society of Ireland – About Dementia https://www.mckr.ie/insights/news-and-publications/what-is-an-enduring-power-of-attorney-and-do-i-need-one https://www.mckr.ie/insights/news-and-publications/what-is-an-enduring-power-of-attorney-and-do-i-need-one Wed, 18 Jan 2017 00:00:00 +0000 www.mckr.ie General Data Protection Regulation Guidelines The Office of the Data Protection Commissioner (DPC) has just released a guidance note on the General Data Protection Regulation (the GDPR). This is the first in a series to assist organisations in their preparations towards full compliance with the GDPR when it comes into force on 25 May 2018. Proper regulation of the processing of personal data is intended to help to bridge the so-called ‘trust gap’ between business and the consumer who entrusts personal data to it, with a resultant increase in electronic commerce as well as consumer business. The Office of the Data Protection Commissioner (DPC) has just released a guidance note on the General Data Protection Regulation (the GDPR). This is the first in a series to assist organisations in their preparations towards full compliance with the GDPR when it comes into force on 25 May 2018. Proper regulation of the processing of personal data is intended to help to bridge the so-called ‘trust gap’ between business and the consumer who entrusts personal data to it, with a resultant increase in electronic commerce as well as consumer business. To concentrate the mind further on compliance, it is worth knowing that potential fines for breaches of the GDPR are substantial (€20,000 or 4% of total annual global turnover, whichever is higher) and that the DPC’s powers of enforcement have been enhanced and also are now better funded. Looking at it from the other side, Helen Dixon, the DPC, suggested at a recent talk, that it may be useful to stand in the shoes of the individual and consider how damaging it could be to have your own personal data revealed or misused in some way. You can find the text of the GDPR itself at: http://ec.europa.eu/justice/data-protection/reform/files/regulation_oj_en.pdf. This is the time for a review The DPC recommends beginning with a “review and enhance” analysis of your personal data processing, present or planned for the future. This “personal data” means information you process relating to an identified or identifiable natural person known as a “data subject” but it does not include a dead person. It does not relate to any information other than personal data. Nor does it relate to anonymised data. “Processing” means any operation or set of operations performed on personal data by automated or other methods such as collection, storage (this includes data filed manually or ordered in some way, say, in a filing cabinet), alteration, dissemination or destruction etc. Start with accountability The first step is to find out what personal data you hold. Make an inventory of it. Draft an analysis on: Why are you are storing the personal data and why and how it was originally gathered. Decide how long you need to retain it or whether you can destroy it. If it is to be retained, how secure is it and can you make it more secure. If the data is shared with others or transferred to another country, set out the basis for doing so and the safeguards in place around that. Document all your findings and decisions. This documented self-analysis is important because the Regulation requires data controllers to be accountable for the personal data they process AND to be able to demonstrate this accountability. However, it is not a once-off exercise – this document needs to be updated on an ongoing basis. Now that you have carried out this review, consider whether any personal data needs to be rectified. Information that you have decided you need to collect and process must be done in a fair and accurate manner and must be kept confidential. Put systems in place so that the data is safeguarded against loss, damage, destruction, or unlawful processing. These may include pseudonymisation, data minimisation (consider whether the data can be collected more selectively in the future) and consider installing systems that automatically provide data protection by design/default in respect of collection, processing, storage and access. Identify and document the legal basis on which you process personal data You must fall within one of the grounds for lawful processing listed in Article 6 of the GDPR. For example, processing is considered lawful if it forms part of a contract with the data subject, or if it is necessary for the legitimate interests of the data controller or a third party. Spell out in full your company’s legitimate interests, as you will be relying on them to justify your data processing. Processing is lawful too if you have the data subject’s consent to process for one or more specific purposes. But it will be binding only where your request for consent in a written declaration is distinguishable from other matters in the declaration and is written “in an intelligible and easily accessible form, using clear and plain language.” A request for consent must also advise data subjects of the contact details of the Data Protection Officer, (if any appointed) and also the recipient(s) of the personal data and/or details of its transfer to another country and of the existence of the data subject’s personal data rights, among other information. Where children are accessing information society services, for example Facebook, they can consent if they are aged at least 16 years and the controller must be able to demonstrate that consent was given. Particular care needs to be taken to ensure that processing is lawful where special categories of personal data are being processed. This type of data would reveal sensitive personal information such as, racial or ethnic origin, political or religious beliefs or data pertaining to health or sex life. Fully review current privacy notices Fully review current privacy notices and update them to comply with the GDPR. This requires you to provide individuals with more information than was necessary previously when collecting their personal data, for example, the period of time for which the data will be stored and the existence of the data subject’s individual rights under the Regulation. Inform yourself about the personal privacy rights The official website of the office of the DPC sets out these rights very clearly for the benefit of the public under its: “What you should know – For Individuals” tab. It informs the public on when and how to make a complaint to the DPC and at present, it is in the process of enhancing its online complaint form. Under the GDPR, it will be easier for an individual to sue data controllers for compensation for infringements of their privacy rights for material or non-material damage. You can expect that members of the public will be aware of their rights and will know how to exercise and enforce them. So it is advisable that you and your staff be aware of them too because the Regulation specifically requires data controllers to facilitate the exercise of these rights under Article 12. The rights of data subjects include: The right to be informed: A data subject has the right to obtain confirmation on whether his/her personal data is being processed and for what purpose(s). The right of access: He/she can get a (first) copy of it free of charge or in an accessible form, if electronically stored. The right of rectification of inaccurate personal data or to have incomplete data be completed. (Article 16) The right of erasure of personal data without undue delay (and particular reference is made to a child’s personal data in relation to the offer of information society services. A possible example being the right of erasure of a teenager’s postings on Facebook.). This right is known as ‘the right to be forgotten’. (Article 17) The right to restrict processing. (Article 18) The right of data portability in a structured, commonly used and machine-readable format, or to have it directly transferred from one controller to another. (Article 20) The right to object to data processing for some purposes, depending on his/her particular situation. The right to lodge a complaint with the supervisory authority. Rights to object to processing in relation to automated decision-making and profiling (Section 4, Article 21 & Article 22). Organise staff training Make sure members of staff are informed about the new Regulation and know how to implement it in the course of their work. Plan on how to respond to data access requests Plan on how to respond to data access requests “without undue delay and in any event within one month” of the request, giving information on action taken on a request (though this can be extended by further two months depending on the complexity and the number of the requests). As well as providing the data requested, there is a list of other information to accompany it, such as informing the data subject of the existence of the right to complain and the existence of automated decision-making and/or profiling. In most circumstances, you cannot charge for providing this information. Consider setting up an online system to give individuals access to their own personal data. Personal data breaches attract fines as do failures to report breaches Data breaches must be notified to the DPC as soon as practicable, and where feasible, not later than 72 hours after becoming aware of the breach. Set up the necessary systems and protocols now to enable compliance with this deadline. Consider whether it is possible to anonymise personal data and at the very least, encryption should be used. Data subjects must be advised of high-risk data breaches without undue delay. A data privacy impact assessment (DPIA) is mandatory A data privacy impact assessment (DPIA) is mandatory for the processing of data likely to be high-risk to the rights and freedoms of natural persons, especially for processing like profiling. It is necessary in the case of the processing of large amounts of the special categories of data or data relating to criminal convictions/offences. A DPIA is also required where there is systematic monitoring, e.g. the use of CCTV, in public places. The assessment must list the measures envisaged to address the risks involved. You must appoint a Data Protection Officer (DPO) You must appoint a Data Protection Officer (DPO) if you are a public authority or, when your “core activities” consist of regular and systematic monitoring of data subjects on a large scale or, where you process on a large scale data under the special categories as a core activity. The DPO is not just a compliance officer. He or she must have “expert knowledge of data protection law and practices” relevant to your business. The GDPR requires the DPO to perform his/her role with a high degree of independence and be supported by you in doing so, with access to your data/operations and by providing him/her with resources and any necessary training. The DPO shall report directly to the highest management level of the controller (i.e. the board of directors or its equivalent). The DPO must cooperate with the office of the DPC (to be known as the Supervisory Authority) and cannot be dismissed or penalised for performing of his/her tasks. In summary, the following are suggested practical steps for GDPR compliance: Review the personal data you process and become accountable for it. Organise staff training and inform yourself and your staff about personal privacy rights and how to facilitate the exercise of them. Identify and document the legal basis on which you process personal data. Review current privacy notices and revise them. Plan on how to respond to data access requests. Plan on how to report data breaches without delay. Decide whether you need to draft a Data Privacy Impact Assessment. Decide whether you need to appoint a Data Protection Officer. Continue with staff training on an ongoing basis. Continue to update your processing review document, privacy statements and DPIA on a regular basis and as necessary. Facilitate the DPO in his/her role. Copyright © McKeever Solicitors, 12 December 2016. This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further information please contact Robert Browne or Ciara Meskell. https://www.mckr.ie/insights/news-and-publications/general-data-protection-regulation-guidelines https://www.mckr.ie/insights/news-and-publications/general-data-protection-regulation-guidelines Mon, 12 Dec 2016 00:00:00 +0000 www.mckr.ie Concussion and the Law The issue of concussion and injury to the brain as a result of impact sustained through sport has become increasingly controversial in recent years. The emergence of medical data linking mental health conditions such as chronic traumatic encephalopathy (CTE), Alzheimer’s disease and depression to head trauma suffered during high impact sport has resulted in an increasing volume of litigation in which sport’s governing bodies are being held legally accountable for sport related brain injuries. What is the duty of care of governing bodies to exposing participants to brain injuries? The issue of concussion and injury to the brain as a result of impact sustained through sport has become increasingly controversial in recent years. The emergence of medical data linking mental health conditions such as chronic traumatic encephalopathy (CTE), Alzheimer’s disease and depression to head trauma suffered during high impact sport has resulted in an increasing volume of litigation in which sport’s governing bodies are being held legally accountable for sport related brain injuries. What is the duty of care of governing bodies to exposing participants to brain injuries? In October 2006, thirteen-year-old Zackery Lystedt was rendered permanently disabled after sustaining a concussion in an American football game. During the game, Lystedt tackled another player and in doing so struck his head off the ground. He was visibly in discomfort and was removed from the game temporarily but re-joined it soon after. Lystedt later collapsed on the pitch and was airlifted to hospital where he underwent surgery to remove both sides of his skull to relieve the pressure from his swollen brain, brought about by the impact he sustained during the game. It took three years from the day of the accident until Lystedt could stand again. By returning to the football game prematurely, Lystedt’s life had been placed in grave danger. In May 2009, the Lystedt Law was enacted in Washington DC. This relates only to recreational amateur sporting contests. Aside from educating young players on the issue of concussion, the key features of the legislation are that both the parents/guardians of the players and the coaches are required to sign a head injury information document. Furthermore, should a player who is suspected of being concussed be removed from the game, they must be given written clearance from a health care official with specific training in concussion before returning to play. The school or club will be absolved from legal responsibility during the game provided that it occurred on school property, the school was adequately insured and that it provides a statement of compliance with head injury protocols, including concussion, in sport. On the 19th July 2011, a group of seventy-five plaintiffs, all of whom were either ex-players or spouses, alleged that the National Football League (NFL) had failed to protect players from long term brain injury as a result of football related concussions. It was further alleged that the league had failed to implement mandatory return-to-play guidelines for players who had been concussed, had failed to adequately regulate post-concussion medical treatment of the players and had misrepresented to the players that there was no link between brain injuries of this nature and mental health conditions in later life. A further two hundred and fifty-two actions were brought against the NFL, each of which followed the same line of allegations. The body of lawsuits was ultimately combined into one multi-district action which was settled in May 2015. and lead to the creation of an Injury Compensation Fund estimated to be worth in excess of $900 million to compensate former football players who show symptoms of severe cognitive impairment. During the 2015 Six Nations, Welsh winger George North took two blows to the head during a match against England. North was struck by a boot in the first half. Then in the second half he clashed heads with Richard Hibbard and briefly lost consciousness. North was allowed to re-join the play on both occasions. The Welsh Rugby Union was subsequently cleared of wrong doing by World Rugby of its decision to allow him stay on the pitch. It was ruled by the international governing body that neither the Welsh medical staff or an independent doctor witnessed the incident before treating him and they were found to have “acted within the framework of information they had at the time”. However, it was conceded that North should have been removed from the game. In August 2016, Cillian Willis became the first professional rugby player to issue proceedings against his employer, Sale Sharks, on the grounds of negligence. He alleges that the club failed to adequately treat him after experiencing two head injuries in a rugby match in March 2013, a short time after which he was forced to retire from the game due to concussion. Under World Rugby guidelines, a player who is suspected of being concussed is forbidden from taking any further part in the game on the day. Allowing Willis to return to play following the head injuries clearly represents a breach of these guidelines by his employers if they knew about it. This is in addition to the duty of care that exists between the player and match official. Legal proceedings have also been issued by professional rugby player Jamie Cudmore against his former club Clermont Auvergne on the same grounds of negligence. Cudmore alleges that after sustaining an impact to the head, after which he failed a test used to identify concussion symptoms, he was allowed to return to play. The club argues that he insisted on returning to the field, but is there a duty of care on clubs to protect players from themselves? The answer has to be a resounding “yes”. In assessing liability, it must be proven on the balance of probabilities that the player’s injury was caused by or contributed to the blows he took to the head as well as the defendant’s failure to apply player safety regulations on concussion related injuries. The decision in Vowles v Evans & The Welsh Rugby Union Limited [2003] provides precedent in this area. In this case, the plaintiff was paralysed as a result of an injury sustained when a scrum collapsed. In assessing the liability of the defendants, the court held that the relationship between the referee and the player was sufficiently proximate to establish a duty of care. Furthermore, it was reasonably foreseeable that should the referee fail to discharge this duty during the course of the match, then injury to the player may result. In this case, it was deemed to be fair, just and reasonable to impose a duty of care upon the referee for the safety of the players. The referee was ultimately found to have failed in the discharge of this duty of care. The Welsh Rugby Union was found liable on the principles of vicarious liability as employer. The issue of death resulting from head trauma sustained while playing rugby has already occurred in Ireland. In March 2013 fifty-seven-year-old Kenny Nuzum, a former Lansdowne prop, died as a result of CTE. Nuzum, had reportedly sustained numerous impacts to his head during a lifetime of scrummaging and had been concussed on several occasions. This was the first time the death of an ex rugby player was attributed to CTE. In January 2011, fourteen-year-old Ben Robinson from Carrickfergus died as a result of receiving several blows to the head during a rugby match. It was reported that he had received treatment on three separate occasions during the match, after which he was allowed re-join the play. The cause of death was deemed by the coroner to be Second Impact Syndrome. In October 2016, Ben’s parents issued civil proceedings in Belfast High Court against the Irish Rugby Football Union (IRFU), Ulster Rugby, World Rugby, Carrickfergus Grammar School, the coach of the school team and the match referee on the grounds of negligence leading to concussive type injuries and the safety and management of the game and failures in the duty of care owed to Ben. Concussion has already forced a multitude of rugby players such as David McSharry, Kevin McLaughlin and Declan Fitzpatrick to pre-maturely retire from the game. The commencement of legal action from other players such as Cillian Willis and Jamie Cudmore has raised concerns that rugby is facing the same situation as the NFL. Court proceedings of this nature will turn on the duty of care owed to the player and how the sport’s governing body and club discharged it. Under current IRFU concussion protocols, any player who is displaying signs of concussion is required to be removed from the field of play immediately and undergo a return to play procedure. This procedure requires that a player cease playing for up to twenty-one days in order to allow the brain to recover. They will not be allowed play again until being medically cleared to do so. This is largely in line with the Lystedt Law. Failure by a club or school to adhere to these concussion protocols will probably give rise to a breach of the duty of care. However, the amount of concussions that a player must sustain before retirement becoming mandatory is still an ongoing issue. In September 2016, a new concussion management system was introduced into the Aviva Premiership. The myplayxplay system is effectively a concussion surveillance system that allows medical staff to monitor a player’s injuries from the side-line via iPad. The system involves a Pitchside Video Reviewer, a member of the medical team, who reviews the injury in question and is responsible for determining whether it needs to be referred to the team doctor for head injury assessment. Furthermore, the King-Devick test is still being considered as a means of recognising concussion in players. The test employs eye testing technology to detect signs of concussion. What remains unresolved however throughout the course of this ongoing issue in sport is the issue of liability. Who is liable for the injury sustained by the player and the costs associated with it? Will it be the referee? The match doctor? The coach or club? The governing body? Copyright © Alban O’Callaghan and Robert Browne, McKeever Solicitors, 6th December 2016. This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further information, please contact Alban O’Callaghan or Robert Browne. https://www.mckr.ie/insights/news-and-publications/concussion-and-the-law https://www.mckr.ie/insights/news-and-publications/concussion-and-the-law Tue, 06 Dec 2016 00:00:00 +0000 www.mckr.ie European Litigation - Commercial, Financial and Contractual Disputes and Claims The likely imminent commencement of the new amending Rules of the Superior Courts in Ireland, will impact on practice and procedure within the High Court, and are likely to fast track legal actions in Ireland. It is worthwhile noting that the Commercial High Court in Ireland has, on average, in its first 10 years, admitted and processed 199 cases per year, with 188 on average being disposed of within that year. The likely imminent commencement of the new amending Rules of the Superior Courts in Ireland, will impact on practice and procedure within the High Court, and are likely to fast track legal actions in Ireland. It is worthwhile noting that the Commercial High Court in Ireland has, on average, in its first 10 years, admitted and processed 199 cases per year, with 188 on average being disposed of within that year. The Rules of the Superior Courts in Ireland have been amended significantly by new amending Rules which were introduced on the 1st of October 2016. The amending Rules have not as yet commenced, but it is anticipated that this will occur within the next few months. The new Rules are contained in two Statutory Instruments Nos. 254 and 255 of 2016 and essentially extend the practice and procedures adopted in the Commercial High Court in Ireland to Chancery and non-jury actions. The thrust of the new Rules is to confer greater control by the Judiciary over the conduct of commercial claims and disputes through the High Court. A litigant will therefore have the option at the outset, of choosing to bring an action in Ireland in the Commercial High Court or in the High Court proper. The distinction between these Courts will dissolve to a large extent, given that the provisions of the new Rules have been in operation in the Commercial High Court for over 10 years. Statutory Instrument No. 255 of 2016 provides for the management of non-jury and chancery proceedings through:- Pre-trial directions;Case management conferences;Pre-trail conferences. The case management and pre-trial conferences shall be directed by a list Judge and a Registrar who will provide directions to litigants to include:- Setting timetables for completion of Pleadings; Directing preliminary or modular trials; Meeting of expert witnesses. Pre-trial directions are not mandatory and will only be provided on the application of a litigant. Pre-trial conferences are mandatory and will come into operation once an action has been set down for trial. This affords the Judge an opportunity of considering the issues to be tried, ensure that they are completed and that the matter is ready to go to trial. At that stage he will fix a date for hearing. The Judge presiding over the pre-trial conference will also hear the action. Rule 17(1) of Statutory Instrument No. 255 of 2016 introduces the concept of witnesses statements being exchanged summarising their evidence, not later than 30 days before the trial. Expert reports are to be dealt with in the same way. Expert Evidence The new Rules now require that where parties intend to call expert evidence, the intention must be pleaded in the statement of claim or defence. The expert’s qualifications and matters upon which he/she intends to give evidence must also be contained in the pleadings. There is also a requirement on experts to acknowledge in their reports, their duty to assist the Court and to disclose any financial or economic interest of any institution with which the expert is connected. There is also an obligation on them to disclose their fees for participating in the action. It is open to the Court to determine the extent of evidence to be given by experts and to limit their evidence to that which is reasonable required to enable the Court to determine the proceedings. Litigants are restricted to calling one expert only in any particular field of expertise, except by direction of the Court. The Court also has power to provide for the appointment of a single joint expert and a party can submit written questions to an opposing party’s expert witness or to the single joint expert. A failure to cooperate can give rise to cost implications. The concept of expert “hot tubbing” can also be directed by the Court where the Judge requires the opposing experts to be sworn in and debate points of evidence with one another. Time management of trials One of the more controversial change in the Rules relates to the new powers given to the Court to regulate the time spent on issues at the trial. The Judge can therefore control the precise allocation of time for each element of a trial. Modular trials Under the new Rules, Judges can direct that different questions of fact be determined in different modules and can provide directions to the parties for this purpose. Conclusion As can be seen, when coming into force, these changes to the Rules of the Superior Courts will serve to give a greater degree of control to Judges throughout the development of a case. It remains to be seen how the new Rules will operate in practice and what impact they will have on the costs of litigation. However, one benefit may well be the speed with which litigation can be determined and they should serve to negative the ability of a reluctant litigant be it Plaintiff or Defendant to drag out the action. The introduction of the new Rules will impact on practice and procedure within the High Court and are likely to fast-track legal actions in Ireland for the benefit of litigants. Copyright © Gerard H. Walsh, McKeever Solicitors, 30 November 2016. This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further information, please contact Gerard Walsh. https://www.mckr.ie/insights/news-and-publications/european-litigation-commercial-financial-and-contractual-disputes-and-claims https://www.mckr.ie/insights/news-and-publications/european-litigation-commercial-financial-and-contractual-disputes-and-claims Wed, 30 Nov 2016 00:00:00 +0000 www.mckr.ie Payment Services Directive 2 (PSD 2) in Short Public consultation of the implementation of Payment Services Directive 2 is imminent. The new regulatory framework it provides will the Commission argue reduce costs, improve the security of payments and facilitate the emergence of new players and innovative new mobile and internet payment methods. Published in Financier Worldwide – December 2016 Public consultation of the implementation of Payment Services Directive 2 is imminent. The new regulatory framework it provides will the Commission argue reduce costs, improve the security of payments and facilitate the emergence of new players and innovative new mobile and internet payment methods. Our article just published in Financier Worldwide on PSD 2 can be accessed by clicking here. This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further information, please contact Paul Foley. https://www.mckr.ie/insights/news-and-publications/payment-services-directive-2 https://www.mckr.ie/insights/news-and-publications/payment-services-directive-2 Tue, 29 Nov 2016 00:00:00 +0000 www.mckr.ie Capital Acquisitions Tax Thresholds The new tax-free thresholds have increased in each Group from 2015 and consequently represent an increase in the amount which may be inherited or passed on by way of gift without becoming subject to taxation. The new Group thresholds for Capital Acquisitions Tax (CAT) on inheritances and gifts taken after midnight on the 12th of October 2016 are set out below. The new tax-free thresholds have increased in each Group from 2015 and consequently represent an increase in the amount which may be inherited or passed on by way of gift without becoming subject to taxation. The current CAT rate is 33%. The current Group thresholds are as follows: Relationship to Disponer Rates effective Previous rate from 14 October 2015 to 12 October 2016 11 October 2016 Group A(Son/Daughter)Includes adopted and step child €310,000 €280,000 Group B(Parent*/Brother/Sister/Niece/Nephew/Grandchild) €32,500 €30,150 Group C(Relationship other than Group A or B) €16,250 €15,075 *In certain circumstances a parent taking an inheritance from a child can qualify for Group A threshold Gifts and inheritances between spouses and civil partners are exempt from CAT. Furthermore, donors may avail of the small gift tax exemption which applies to the first €3,000 of all gifts passed to a donee in any calendar year. There is no relationship requirement to avail of this exemption. This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further information on Wills, Probate and Estate Planning, please contact Helen Sweeney. https://www.mckr.ie/insights/news-and-publications/capital-acquisitions-tax-thresholds https://www.mckr.ie/insights/news-and-publications/capital-acquisitions-tax-thresholds Mon, 07 Nov 2016 00:00:00 +0000 www.mckr.ie European Account Preservation Order EU Regulation 655/2014 has been adopted by Ireland and creates a Mareva Injunction type relief across member states. In effect, it will make it more difficult for Debtor’s to put assets beyond reach of lawful Creditors. EU Regulation 655/2014 has been adopted by Ireland and creates a Mareva Injunction type relief across member states. It will be implemented on the 18th January 2017, and it aims to improve the efficiency of enforcement of Judgments within the EU regarding bank accounts and Debtors assets where legal recourse is cumbersome in cross-border cases and, in particular, where a Creditor seeks to preserve accounts located in one or more member states. In effect, it will make it more difficult for Debtor’s to put assets beyond reach of lawful Creditors. The UK and Denmark have opted out of the Regulation which means that neither country is taking part in its adoption and neither country is bound by or subject to its application. The Regulation applies to accounts held with credit institutions whose business is to take deposits or other repayable funds from the public. It applies to accounts in the name of the Debtor and in the name of a third party on behalf of the Debtor. The European Account Preservation Order (EAPO) will prevent the transfer or withdrawal of funds held by a Debtor in a bank account maintained in another member state, if there is a real risk that, without such a measure, the subsequent enforcement of the Creditor’s claim against the Debtor will be impeded or made substantially more difficult. The Order should have the effect of preventing not only the Debtor himself, but also persons authorised by him, to make payments through that account, for example by way of a standing order or direct debit or the use of a credit card. The Creditor must satisfy the Court that there is an urgent need for the order. Only the Courts of the Debtor’s domicile have jurisdiction where the Debtor was acting outside of his or her trade or profession. However, the Regulation should ensure that the restriction on a Debtor’s account does not affect amounts which are exempt from seizure under the law of the member state; for example amounts necessary to ensure the livelihood of the Debtor and his family, or family law maintenance payments or orders. Depending on the procedural system applicable in the member state, the relevant amount should either be exempted by the body responsible e.g. the Court or the bank before the Order is implemented, or be exempted at the request of the Debtor after implementation of the Order. I imagine in Ireland a Debtor will have to apply to Court to exempt some expenses from the account. The Regulation does not apply to claims against a Debtor in insolvency proceedings. It is intended that the EAPO is available to a Creditor prior to initiating proceedings, at any stage during such proceedings, and after Judgment has been obtained. It even goes so far as to make the order available for claims that are not yet due, as long as such claims arise from a transaction or an event that has already occurred and the amount can be determined. This includes claims relating to Tort and Civil claims for damages or restitution which are based on an incident giving rise to criminal proceedings e.g. assault, (although it is hard to imagine how a claim for general damages can be determined in advance). However, the Regulation provides for the commencement of proceedings within tight time limits from the date of granting of an EAPO. In cases where a Creditor seeks a preservation order in advance of proceedings being issued or in advance of Judgment, the Court should be satisfied, on the basis of the evidence submitted by the Creditor, that the Creditor is likely to succeed on the substance of his claim against the Debtor. What is the bar? Is it the balance of probabilities? Is there a duty of full disclosure, such as in interim injunctions applications, to disclose all material facts even where it may damage the Creditor’s application? Given that there are measures for a Debtor to claim damages against a Creditor in the case of EAPOs wrongfully obtained, this would seem to be the prudent approach to take. The Creditor must also be able to show that his claim is in urgent need of judicial protection and that without the order, the enforcement of the existing (or future) judgment may be impeded or made substantially more difficult because there is a real risk that, by the time the Creditor is able to seek enforcement of the judgment, the Debtor may have dissipated, concealed or destroyed his assets or disposed of them under-value. There are a number of things going on here. Firstly, a Creditor needs to be able to show that the account over which he seeks a preservation order is the only account or asset available to satisfy a (future) judgment. Secondly, he must show that there is a real risk that the Debtor intends to dissipate or conceal or destroy the assets or accounts or dispose of them at an under value. Thirdly, the amount frozen in the accounts must be proportionate to the amount of the Creditor’s claim. In order to ensure the surprise effect of an EAPO the Debtor cannot be informed about the Creditor’s application nor be heard prior to the issue of the order. Nor should the Debtor be notified of the order prior to its implementation. Clearly, the granting of an EAPO would be the proverbial sledgehammer. The Regulation recognises this and has attempted to build in safe-guards. One such important safe-guard is the possibility of requiring the Creditor to provide security so as to ensure that the Debtor can be compensated at a later stage for any damage caused to him by an EAPO. Such security could take the form of a deposit or a bank guarantee or a mortgage and the Court should have discretion in determining the amount of security sufficient to prevent abuse of the procedure and ensure compensation to the Debtor. In cases where the Creditor has not yet obtained a judgment, the provision of security should be the rule and not the exception and the Court should only exceptionally dispense with this requirement or require the provision of security in a lower amount so an applicant Creditor would need to be fairly certain of their grounds before seeking an EAPO pre-judgment. Another important element for striking the appropriate balance allows for a Debtor to sue (or counter-claim against) a Creditor for any damage caused to the Debtor by the preservation order due to default on the Creditor’s part in obtaining the EAPO. The Regulation does not deal with the question of the possible liability of a Creditor towards a bank or a third party but nonetheless mentions it as a possibility. The Regulation envisages that member states will introduce this legislation into their national law and may introduce variations such as strict liability on the part of a Creditor who wrongly obtains an order. It remains to be seen whether Ireland will simply adopt the Regulation or introduce an Act to incorporate not only this but also a conflict of law regarding the Creditor’s liability. So far it appears that a Creditor needs to be very well informed of the Debtor’s assets and bank accounts abroad. However, the Regulation provides that in order to overcome practical difficulties in obtaining information about a Debtor’s bank accounts, the Regulation sets out a mechanism allowing a Creditor (who has already obtained judgment) to request that the information needed to identify the Debtor’s account be obtained by a Court in the member state in which the Creditor believes that the Debtor holds an account, before an EAPO issues. Member States were obliged by Article 50 to communicate this and other information to the EU Commission by the 18th July 2016. The information notified by the Member States (including Ireland) pursuant to Article 50 of the Regulation is currently being processed by the European Commission and will be published in the European e-Justice Portal (https://e-justice.europa.eu/home.do?plang=en&action=home) by the end of the year and, at the latest, by 18 January 2017. I imagine the High Court has been the “designated information authority” in Ireland and Creditors will have to seek a Court Order directing the bank to disclose the account number/details of a Debtor. The information obtained regarding identification of the Debtor’s bank account should not be provided to the Creditor and should be provided only to the requesting Court and, exceptionally, to the Debtor’s bank. (It seems illogical that anyone would try to withhold this information from the Debtor’s bank because that is more than likely the source of the information in the first place). An EAPO issued to a bank will oblige the bank to implement the Order without delay. It may be necessary for a bank to study the account to ascertain standing orders and direct debits and establish whether they need to be cancelled or stopped, and to establish whether the amount in the account exceeds the amount ordered to be preserved. The final amount reserved in a bank account may be subject to settlement of transactions which are already pending at the moment the order is received. Such pending transactions may only be taken into account when they are settled and before the bank is obliged to issue a declaration pursuant to Article 25. That declaration must be issued by the end of the third working day following implementation of the EAPO. If the EAPO does not specify the number of the account of the Debtor but provides only the name and/or other details regarding the Debtor the bank shall identify the account held by the Debtor with the bank indicated in the order. This may be easier said than done especially in circumstances where surnames are common. If, on the basis of the information provided in the Order, it is not possible for the bank to identify with certainty the account of the Debtor the bank may be obliged to revert to the original Court to find out the account number over which the order was made. One would have thought the EU would include this information in the Order but this does not appear to be the case for data protection reasons. Article 25.4 provides that the bank shall, upon request by the Debtor, disclose to the Debtor details of the EAPO. The bank may also do so in the absence of such a request. Article 26 provides that any liability of the bank for failure to comply with its obligations under the Regulations shall be governed by national law. Funds held in joint accounts, or held by a third party on behalf of the Debtor, or by the Debtor on behalf of a third party, may be preserved under the Regulations only to the extent to which they may be subject to an EAPO under the law of the member state. Article 34 provides that a Debtor may apply to the Court where the account is held seeking to limit the application of the EAPO on the grounds that certain amounts held in the accounts should be exempt from seizure e.g. if they belong to a third party. This would apply to an EAPO made in respect of a solicitor’s client account where the solicitor was the Debtor. Article 43 provides that a bank should be entitled to seek payment or reimbursement from a Creditor or Debtor of the costs incurred in implementing an EAPO only where, under the law of the member state of enforcement, the bank is entitled to such payment or reimbursement in relation to equivalent national orders (Mareva Injunctions or Third Party Discovery Orders). It is intended that the Regulation should not prevent the payment of fees for enforcement of the EAPO and this issue will be left to the national law of the member state. The Regulation also provides for the imposition on the bank charged with enforcing the EAPO, an obligation to declare whether and to what extent the Order has led to the preservation of any funds of the Debtor and an obligation on the Creditor to ensure the release of any funds preserved that exceed the amount specified in the order. Documents relating to the application and Order must be translated into the native language of, and served on, the bank where the account is held. Copyright © Robert F. Browne, McKeever Solicitors, 26th October 2016. This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further information, please contact Robert Browne. https://www.mckr.ie/insights/news-and-publications/european-account-preservation-order https://www.mckr.ie/insights/news-and-publications/european-account-preservation-order Wed, 26 Oct 2016 01:00:00 +0100 www.mckr.ie Pitched Battle What is the standard of care owed to those entering the sporting arena – and when do acts committed on the field of play become acts of negligence or criminal assault? Published in the Law Society Gazette – October 2016 What is the standard of care owed to those entering the sporting arena – and when do acts committed on the field of play become acts of negligence or criminal assault? Published in the Law Society Gazette – October 2016 This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further information, please contact Alban O’Callaghan or Robert Browne. https://www.mckr.ie/insights/news-and-publications/pitched-battle https://www.mckr.ie/insights/news-and-publications/pitched-battle Wed, 12 Oct 2016 01:00:00 +0100 www.mckr.ie Dilapidations : Know Your Lease Dilapidations should be at the forefront of every landlord and tenant’s mind from the outset of leasehold negotiations. Dilapidations often arise when a lease comes to an end, in cases of assignment of leasehold interests or where a break clause is exercised and when a tenant receives a Schedule of Dilapidations setting out its obligations under the lease Dilapidations should be at the forefront of every landlord and tenant’s mind from the outset of leasehold negotiations. Dilapidations often arise when a lease comes to an end, in cases of assignment of leasehold interests or where a break clause is exercised and when a tenant receives a Schedule of Dilapidations setting out its obligations under the lease vis-à-vis repair, refurbishment and decoration, etc. Landlords should ensure that they document the condition of the premises at the outset of the lease by way of photographic evidence to support any dilapidations claim they intend to make against their tenant and tenants should do so also to support their defence to any such dilapidations claim. What are dilapidations? Dilapidations are items of disrepair or defects which tenants are required to rectify or pay to have remedied under repairing covenants contained in their lease prior to an exit, break or natural ending of a lease as tenants have an obligation to keep the premises as they find it.1 Landlords seek to impose as broad a repairing obligation as possible on their tenants thereby reducing their exposure to financing repairs and to ensure that they receive a clear rent free from any deductions. The nature of the letting will determine the extent of a tenant’s obligations under the lease for example, in the case of a single let of an entire premises occupied by one tenant only with no shared common areas, landlords will seek to impose full internal and external repairing obligations on the tenant making them liable to repair the entire building.2 Such lettings are commonly referred to a Full Repairing and Insuring ("FRI") Lettings. In multi-let premises cases, landlords will generally be responsible for the structure and the exterior and tenants will be responsible for the internal non-structural elements. Limiting Repair Obligations – Equity & Fairness Repair obligations may be limited to a Schedule of Condition reflecting the condition of the premises at the start of the lease. The important thing to note in such cases is that tenants are not obligated to return the premises to the landlord in any better state of repair then existed at the start of the lease. Furthermore, landlords seek to ensure that the premises is retuned in the same condition it was received by the tenant. Prudent tenants will try to negotiate for the exclusion of fair wear and tear, which would ensure that they are not obliged to repair anything which would deteriorate over the course of the term of the lease. A pragmatic approach in such negotiations would be for both parties to agree upon a clause to keep the demised premises in good repair which would benefit both parties.3 The issue of tenant fit-out works can be contentions and tenants should ensure that they are not required to re-instate the premises to the condition that they found it in thereby imposing an obligation on them to remove all fit-out materials at the end of the term. In the interest of equity and fairness, landlords will often appreciate that such fit-out works can add to the future marketability of the premises and will be agreeable to the fit-out remaining intact at the end of the term. Decoration, covenants and cleaning It is important for a landlord to include provisions in the lease which impose an obligation on the tenant the keep the premises clean tidy and decorated and leases often provide for internal and external decoration years whereby the tenant is obliged to paint the interior and exterior of the premises at set intervals, usually every four or five years during the term of the lease.4 Statutory Requirements Commercial leases usually contain a covenant on the part of the tenant to comply with statutory requirements, to ensure that the tenant is obliged to carry out certain works required the statutory authority for example, fire safety matters and landlords are entitled to enquire that such covenants are complied with by tenants. The Balance of Power Market conditions determine the level of negotiating power tenants and landlords have when negotiating commercial leases and the improvement in economic circumstances and the rise in commercial rents in the last couple of years has seen a noticeable shift in power in favour of landlords since the recession hit in 2007. The Dublin commercial property market is looking bright for the foreseeable future and the Dublin office market in particular has performed steadily for the last few years benefitting from high levels of Foreign Direct Investments (“FDI") since 2008 from the likes of Google, Microsoft and Mastercard to name but a few and according to JLL research, close to 70 per cent of the take-up of office space in the first half of 2015 was by new and existing FDI companies.5 Demand for prime commercial properties remains steady according to Lisney and rents have remained stable across the industrial and retail sectors, while increasing in the office sector. Prime vacancy rates remain at low levels however supply issues remain a concern.6 Dilapidation Claims – Who pays? A tenant may well be responsible for the landlord’s professional fees in dealing with dilapidation claims including legal and surveying fees. Tenants should complete dilapidation works in a timely fashion because if landlords are prevented from letting the premises at the end of the lease because dilapidations works have not commenced or been concluded by the tenant, then the tenant may be liable for such loss of rent, etc., depending on the terms of the lease. Know your Lease Tenants are often advised to physically examine and defend dilapidations claims and landlords should not be put in a better position than they would have been had the tenant complied with their dilapidations obligations and it is crucial for tenants to budget for dilapidations claims made by their landlord when exiting their lease. It is worth noting that there is no clear procedure for dealing with dilapidations claims in this jurisdiction like that of England and Wales and in the absence of agreement between the parties or provisions in the lease the ultimate remedy is litigation in the Irish Courts however rare these cases are. Given the improvement in the Irish economy and the current level of activity in the commercial landlord and tenant arena, dilapidations will continue to play and important role in the commercial sector and landlords and tenants alike need to be fully aware of their obligations under their lease from the outset. Copyright © McKeever Solicitors, 1 September 2016. This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further information, please contact Helen Sweeney 1 Accountancy Ireland – “Don’t be Blindsided by Dilapidations”. 2 Complex Conveyancing, 2008, Tottel Publishing. 3 Ibid 4 Brief mention should be made about ‘improvements’ under the heading ‘alterations’ and landlords need to ensure that any alterations made by a tenant do not constitute “improvements” under Section 45 of the Landlord And Tenant (Amendment) Act 1980 and if they do proper procedures need to be followed. If works such as additions or alterations have been made to the existing premises constitute “improvements” then the tenant will be entitled to compensation when the tenancy ends provided the tenancy has not been terminated for non-payment of rent. A prudent tenant will apply for the landlord’s prior written consent and enter into a licence for works before undertaking such alterations. – Complex Conveyancing, 2008, Tottel Publishing. 5 ESRI Research Note – “FDI and the Availability of Dublin Office Space”. 6 Rental Indices Report from Lisney (lisney.com). https://www.mckr.ie/insights/news-and-publications/dilapidations-know-your-lease https://www.mckr.ie/insights/news-and-publications/dilapidations-know-your-lease Thu, 01 Sep 2016 01:00:00 +0100 www.mckr.ie Legal Right To Paternal Leave The Paternity Leave and Benefit Act 2016 was recently passed by the Dáil and marks a significant step forward for paternal rights in the workplace. As of the 1st of September 2016, a relevant parent, as defined under the Act, will be statutorily entitled to two weeks paid paternity leave from their employment. The Paternity Leave and Benefit Act 2016 was recently passed by the Dáil and marks a significant step forward for paternal rights in the workplace. As of the 1st of September 2016, a relevant parent, as defined under the Act, will be statutorily entitled to two weeks paid paternity leave from their employment. The Act has extended the scope of the entitlement available to mothers so as to include inter alia the father of the child. This article will set out the key features of the legislation and steps that employers should take in order to prepare for the Acts enactment. The Paternity Leave and Benefit Act 2016: An Overview From the 1st of September 2016, a relevant parent will be entitled to two weeks paid paternity leave from their employment in order to assist in the caring of the child and/or supporting the mother, adopting mother or male adopter of the child. The payment that the employee will be entitled to receive from the Department of Social Protection is €230 per week – the same as the current maternity leave benefit available to mothers. This entitlement is subject to the condition that the employee having made sufficient PRSI contributions. The leave period may be taken at any stage within twenty-six weeks from the arrival of the child. Who Is Entitled? A “relevant parent” entitled to paid employment leave has been defined under the legislation as the father of the child, the spouse, civil partner or co-habitant of the child’s mother. This equally applies in the case of same sex couples, that of adopted children and to the parents of donor conceived children. It must be noted that this benefit extends also to self-employed individuals. The leave period is limited to two weeks even in the case of multiple births. Furthermore, it applies to one of the parents only. The only possible exception to this would be in the case of a biological father who takes paternity leave where the subsequent adopting father who would also be entitled to the leave period. Notice Period Requirements The leave may be applied for by the employee as soon as reasonably practicable but not later than four weeks before the intended leave period is to commence. They will be required to produce a medical, or otherwise appropriate certificate, confirming the pregnancy of the expectant mother and the expected date of birth of the child. In the case of adoption, proof of the date of placement will be required. In the event that the child is born or placement occurs before the date that the leave was scheduled to commence, the employee will be deemed to have given sufficient notice if it is done within a period of seven days from the event. Conversely, if the child is born or the placement occurs at a date later than the date on which the leave was due to commence, the employee may select another date on which it can commence. Should the employee become sick before the leave period commences, the leave may be postponed provided that they give the employer written notice and proof of their sickness within a reasonable time frame. This is subject to the condition that it is not at a time later than the date on which the leave was due to commence. The leave may be postponed to a time no later than twenty-eight days after the arrival of the child. If the child requires hospitalisation, the leave may also be postponed to a time that is agreed between the employee and employer. Abuse of Leave It must be noted that the purpose of the employment leave is for the employee to care for the child and/or assist their respective partner in doing so. If an employer has reasonable grounds for believing that the employee is using the leave for another purpose, they are entitled to terminate the employees leave by way of written notice. Employers Perspective It is advisable that employers put in place a paternity leave policy that sets out the process to be followed by employees seeking paternal leave. This should include the requisite time frames and proofs that must be adhered to as outlined above, the internal processes for applying for the leave and the complaints resolution procedure to be followed in the event of a dispute. In this regard, the complaint may be referred to the Workplace Relations Commission. Employers are not under an obligation to pay the employee paternal benefit while on leave. This will be provided by the Department of Social Protection, although they do have discretion to provide a top up payment to the employee. However, should the employer decide to provide such a payment, it would be advisable that it is done in accordance with the existing maternity leave policy and does not discriminate between male and female taking their respective leave periods. Employers will be obliged to maintain records of all paternal leave that has been granted to employees. These records must indicate the length of the employee’s employment and dates and times on which the paternal leave was granted. Failure of an employer to comply with this requirement will be an offence which may result in the employer being liable to a maximum fine of €4,000. © Alban O’Callaghan, McKeever Solicitors, 18th August 2016 This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further information, please contact Alban O’Callaghan or Patrick Kelly. https://www.mckr.ie/insights/news-and-publications/legal-right-to-paternal-leave https://www.mckr.ie/insights/news-and-publications/legal-right-to-paternal-leave Thu, 18 Aug 2016 01:00:00 +0100 www.mckr.ie Financier Worldwide: Financial Services Regulation 2016 In the 2016 Financier Worldwide Financial Services review, author and Partner Paul Foley gives his perspective on the current legal and regulatory Financial Services environment. Financial Regulation, Financier Worldwide, August 2016. In the 2016 Financier Worldwide Financial Services review (August 2016 edition), author and Partner Paul Foley gives his perspective on the current legal and regulatory Financial Services environment. This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further information, please contact Paul Foley. https://www.mckr.ie/insights/news-and-publications/financier-worldwide-financial-services-regulation-2016 https://www.mckr.ie/insights/news-and-publications/financier-worldwide-financial-services-regulation-2016 Thu, 11 Aug 2016 01:00:00 +0100 www.mckr.ie The Law on the use of Faraday Cages in Public Establishments A publican in East Sussex, England recently installed a material in the walls of his premises which had the effect of preventing patrons from using their smartphones while inside. Introduction A publican in East Sussex, England recently installed a material in the walls of his premises which had the effect of preventing patrons from using their smartphones while inside. The material, comprised of silver foil and fine copper mesh, causes the phone’s signal to be blocked from passing through the wall, thereby rendering them inoperable. The reason behind this move, according to the pubs owner, was to encourage his patrons to interact with one another as opposed to retreating into their smartphones. While novel in its inception, this technology is not new. It has been part of everyday life for the better part of the last century and a half and is technically referred to as a Faraday cage. This article seeks to clarify the legality of its use in public establishments, such as pubs and restaurants, and the legal ramifications of doing so. A Faraday Cage: What Is It? Invented by the English scientist Michael Faraday in 1836, a Faraday cage is essentially an enclosure made of conductive material, often fine metal mesh or perforated sheet metal. The electric charges within this material cause electromagnetic radiation from around the cage’s exterior to be distributed in a way that cancels out the electromagnetic radiation that is within the cage. Thus the cage effectively prevents external electromagnetic radiation from entering the interior. The effect of this is that transmission or reception of radio waves is blocked by the cage, rendering the inside of the cage free from radioactive waves – a virtual “dead spot”. What Does It Do? Provided that the material is of the requisite thickness, the cage will prevent electromagnetic interference from passing through it. A common use for this is in the case of microwave ovens where the window is covered in this material in order to contain the electromagnetic energy within the oven, while protecting the exterior from the radiation. Other examples are in the case of elevators and cable cars which are made of metallic conducting frames. This material prevents electromagnetic radiation from entering inside the elevator, causing mobile phones and radios to stop working. However, the most common example of one of these cages in operation would be aeroplanes and cars which are designed to protect the interior from a lightning strike. This is done by the electric charge of the lightning bolt being caused to redistribute around the fuselage rather than penetrating the interior. What Is The Legality Of It? Faraday cages are legal for many domestic purposes, such as those outlined above. However, conflict can arise when any apparatus of this nature has the effect of unlawfully interfering or actively jamming radio waves or wireless telegraphy. “Wireless technology” has been defined under section 2 of the Broadcasting and Wireless Technology Act 1988 as “the emitting and receiving…over paths which are not provided by any material substance constructed or arranged for that purpose, of electric, magnetic or electromagnetic energy of a frequency not exceeding 3 million megahertz, whether or not such energy serves the conveying (whether they are actually received or not) of communications, sounds, signs, visual images or signals, or the actuation or control of machinery or apparatus.” It is therefore arguable that smartphone signals constitute wireless technology for the purposes of this legislation. Under section 7 of the Wireless Telegraphy Act 1972, the sale, let, hire, import or manufacture of apparatus that has the purpose interfering with wireless telegraphy is prohibited. Section 2 of S.I. No. 66 / 2011 somewhat practically defines “wireless technology interference apparatus” as any apparatus for wireless telegraphy that is designed to cause interference. The offence carries a maximum penalty of €5,000 upon summary conviction and €250,000 upon conviction on indictment pursuant to section 10 of the Wireless Telegraphy Act 1972 (as amended by the Broadcasting and Telegraphy Act 1988 and Broadcasting Act 2009). Conclusion It has been argued that the installation of a Faraday cage in a public establishment does not actually jam a wireless signal i.e. it does not actively emit radio frequency signal that causes other radio signals from being received and therefore is not illegal. To do so would most certainly constitute an offence under Irish law. The ambiguity arises due to the fact that the cage does not actively emit such signals but instead acts as a stationary filter. It is therefore prima facie not illegal under Irish law to install a cage of this nature on a premises. However, section 7 of the 1972 Act does provide grounds on which its legality may be challenged. © Alban O’Callaghan, McKeever Solicitors, 9th August 2016 This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further information, please contact Alban O’Callaghan or Patrick Kelly. https://www.mckr.ie/insights/news-and-publications/the-law-on-the-use-of-faraday-cages-in-public-establishments https://www.mckr.ie/insights/news-and-publications/the-law-on-the-use-of-faraday-cages-in-public-establishments Tue, 09 Aug 2016 01:00:00 +0100 www.mckr.ie Charities - Collaborate or Merge? Merger or other forms of collaborative working can make better use of charitable funds and property and provide better services for beneficiaries. For example if two charities in the same area are doing similar work and competing for funding, a merger may be the best way to secure funding and provide a united voice. Merger or other forms of collaborative working can make better use of charitable funds and property and provide better services for beneficiaries. For example if two charities in the same area are doing similar work and competing for funding, a merger may be the best way to secure funding and provide a united voice.1 This article provides a broad outline on the issues involved in Collaboration by Charities and also those involved in merging two Charities. Charitable Status Charitable status of an organisation is dependent on the organisation having charitable purposes for the public benefit. Charitable purposes are well defined by the Charities Act 2009.2 Objects and Powers Charities must operate within their legal powers, as set out in their Memorandum and Articles and must also comply with the laws and regulatory requirements to which they are subject, including Tax law, Charities law and the 2014 Companies Act (where a company limited by guarantee). Efficiency and Transparency Charities whilst they are not for profit, they must comply with the law, be transparent and efficient. Donors will demand compliance with law transparency and efficiency. The Charities Commission in England say the ultimate aim of any Charity must be the provision of the very best services for those who benefit from its work and one way that this can be achieved is by joint working. Existing Charity already established When considering the establishment of a Charity, the promoters should always consider, is the charitable purpose already being carried out by an existing Charity. If so, the promoters should consider challenging their energy and resources to the already established Charity and not incur the cost and ongoing maintenance and compliance costs to the donors, associated with setting up and running their own Charity. For existing Charities, they always need to consider whether their services or products can be delivered more efficiently with less cost or whether can they improve their services, by using their invaluable experience of beneficiaries views and needs to, in the case for example of public services, to inform, influence the design and delivery of public services. Collaboration Collaboration can consist of sharing administration, or sharing resources, joint campaigning and or joint service delivery. The arrangements can be for as short a period or as long a period as the two Charities may agree or as authorised by the regulatory authorities. The collaboration will need to further each Charity’s objects, and the use of resources involved in the collaboration must be appropriate. Each party will need to assess the other from a donor perspective, risk and reputation perspective, and to this extent, it is no different to two companies with well known brands collaborating with each other or entering into a joint venture with each other. Collaboration can increase public trust in both Charities and it may assist in fundraising. It may also allow each Charity to guage and assess the joint working before embarking on a full merger. In any agreement to collaborate, issues to be considered for inclusion in the agreement are the specific objectives, regulatory approvals or clearances required, co-ordinators, the duration, the tasks and obligations of each Charity, compliance with law, how decisions are made, the contributions from each Charity, the staffing to be made available by each party, ownership of work jointly created, disputes, risk management, review and evaluation, and termination. Merger of Charities Collaborative working can sometimes lead to a full Merger. Any Merger in an Irish context will require approval of the Charities Regulatory Authority (CRA) and the Revenue Commissioners at the very least. Additionally where the merging entities are companies limited by guarantee (which is normally the case) then the merger provisions of the Companies Act 2014 will have to be complied with. In order to consider merging, the Objects of each Charity must be similar, the Memorandum of each must allow the type of Merger envisaged, sufficient in each case to satisfy the Revenue and the CRA. Charities can merge by, one taking over the other’s work and assets, form a new Charity to take over the work and assets of the Charities involved or one Charity take over the management of another but keep it as a separate entity within a newly created Group. Due diligence in the case of a Merger is no different to that involving private companies, except that the degree of due diligence is much reduced due to the charitable status afforded to Charities under Irish Tax law. Because Charities membership is comprised of individuals who in many cases have given years of service on a voluntary basis in doing work for the particular Charity (corporate membership of a Charity is possible now with the Companies Act 2009 and subject to Revenue and CRA consent), each Charity will need to ensure that the members of each Charity are in agreement to the Merger to the extent required by their constitutional documents and Company law. Additionally and most importantly, Charities will need to be sure that donors, particularly corporate donors will continue funding the merged entity. In order to decide whether two or more Charities should be merged, the Board of Directors of each Charity must consider the balance between the advantages and disadvantages of doing such. The long-term benefits of the Merger must outweigh the risks. The following are some of the advantages and disadvantages which must be considered when contemplating a Merger:3 Advantages: Increased Efficiency Mergers enable charities to reduce the duplication between separate organisations with similar objectives. This reduction in competition allows charities to have a greater presence in the public domain and enhances their opportunities to receive funding. Increased Scale The combination of resources allows projects of a greater scale to be pursued instead of multiple organisations pursuing the same goals on a minute level. This increases the impact and the benefits derived from projects. Increased Funding Opportunities By pooling the separate Charities’ assets together greater sponsorship and funding opportunities arise. Overcoming Economic Uncertainty Charitable mergers assist in the sustainability of Charities helping them survive the somewhat turbulent economic climate. Reduced Overheads Merging enables costs to be reduced. For example administrative and advertising costs are positively affected with individual running costs being minimised. Disadvantages: Impact on the Organisation Mergers tend to result in a reduction of staff. Despite having similar values and objects different charitable organisations may have different cultures which can prove problematic. For example different roles may be required of employees, different working hours may be imposed and different fundraising events requested. Costs The merger process comes at a cost for charities. Potential costs include due diligence exercise costs, professional fees, relocation expenses and restructuring costs. The integration of staff and systems may also require financial resources being employed. Loss of Identity When Charities merge their individual branding may be lost. The public profile and goodwill associated with a charity may become depleted and funders may be lost as a result. If the advantages outweigh the potential disadvantages, then merging may be worthwhile. The Boards must be conscious that charities face a number of obstacles in the pursuit of a successful merger. In Ireland the CRA and the Revenue assesses the merger of Charities on a case by case basis. Competition law clearance is unlikely to apply, but it must be considered. Overall, the merging of Charities in Ireland is relatively uncommon. However, Charities should be open to the possibility of merging particularly in instances where the advantages associated with merging outweigh the disadvantages. The potential stability afforded by merging is undoubtedly influential in this process and Charities should give real consideration to the prospect in order to ensure longevity and success. © Andrew Clarke, McKeever Solicitors, 31st July 2016 Please note this article is not a substitute for legal advice and should not be taken as legal advice. If you have any queries in connection with the entry by your Charity into Collaboration with another Charity or Merger with another Charity please contact Andrew Clarke, Associate, McKeever Solicitors, IFSC, Dublin 1. 1 Gov.uk: guidance. How to merge or link charities 2 Charitable purpose means in an Irish context a) the prevention or relief of poverty or economic hardship b) the advancement of education c) the advancement of religion d) any other purpose that is of benefit to the community. Benefit to the community includes, a) the advancement of community welfare including the relief of those in need by reasons of youth age, ill health or disability, b) the advancement of community development, including rural or urban regeneration c) the promotion of health, including the prevention or relief of sickness, disease or human suffering and d) the integration of those who are disadvantaged and the promotion of their full participation in society. 3 Source: Charities Commission England https://www.mckr.ie/insights/news-and-publications/charities-collaborate-or-merge https://www.mckr.ie/insights/news-and-publications/charities-collaborate-or-merge Sun, 31 Jul 2016 01:00:00 +0100 www.mckr.ie The SME Regulations 2016 From July 1st 2016, regulated lenders (other than credit unions) must comply with additional requirements in respect of SME lending, enforcement and the taking of security. From July 1st 2016, regulated lenders (other than credit unions) must comply with additional requirements in respect of SME lending, enforcement and the taking of security. The Central Bank highlight that these include (i) giving SME borrowers greater transparency around the application process; (ii) providing SME borrowers with reasons for declining credit, in writing, that are specific to their application; (iii) providing greater protections for guarantors; (iv) contacting SME borrowers who have been in arrears for 15 working days; (v) warning SME borrowers if they are in danger of being classified as not co-operating; and (vi) Expanding the grounds for appeal and setting up an internal appeals panel. The Central Bank of Ireland has made the following regulations (amending existing regulations) which apply to small and medium-sized enterprises. These regulations will come into operation on the 1st July 2016 for those regulated entities that are not considered credit unions and will apply to credit unions on the 1st January 2017. These regulations apply to a regulated entity which Provides or offers to provide credit to a borrower Entering or offering to enter into a credit facility agreement Proposing a credit facility agreement Providing or offering an alternative arrangement Engaging in credit servicing activities A regulated entity will be fully responsible for settling its obligations when it outsources. The two different categories of small and medium enterprises include: 1. Micro and small enterprises These include enterprises which currently employ less than 50 persons and whose annual turnover and balance sheet total is €10 million or less 2. Medium-sized enterprises A micro, small and medium-sized enterprise that is not a micro and small enterprise This regulated entity must offer borrowers with the option of a meeting to review credit facility agreements, security and alternative agreements. i. Unsolicited credit This only applies to lending to micro and small enterprises The regulated entity must only offer credit to a borrower after an application by a borrower for this credit. ii. Expertise for business lending and annual meetings The regulated entity should provide appropriate training to the staff involved on the requirements and the policies for an application for credit, dealing with borrowers who maybe in positions of financial difficulties. The regulated entity must also provide contact points to those enquiring into the provisions of credit. The regulated entity should offer an annual meeting which should include a credit review and if/where the borrower accepts arrange the meeting, meet the borrower and complete the credit review in line with the requirements. The regulated entity should inform the borrower of the timeframe and the result and complete the credit review within a reasonable timeframe. iii. Provision of information Information must be provided by the regulated entity in a clear manner which does not disguise information to the borrower and must be issued in a way which is clear. The regulations also ensure a warning statement is issued. iv. Advertising This only applies to micro and small enterprises An advertisement for credit should; Include a warning statement and if it includes an interest rate the regulated entity should state whether this is fixed or variable Display the total cost of credit to the borrower Indicate the difference between the total cost of credit and the consolidated credit v. Pre-contract information The regulated entity must provide the borrower with information and guidance in terms of what would constitute a successful credit application which includes the type of agreement, total amount of credit, duration of agreement, outline of steps and applicable interest rate Before a borrower is bound by a credit facility agreement, the regulated entity must provide the borrower with information concerning the credit facility agreement and the payments to be made by the borrower In certain cases, the charges for payment transactions, other charges arising from a credit facility agreement and warning statements including the borrower’s rights must be stated For micro and small enterprises where applicable the charges for maintain accounts, payment charges or other charges concerned with the credit facility agreement. vi. Post-sale information A regulated entity shall provide a borrower with a statement which should include relevant information about the statements including the time, amount, balance and interest rates to which it relates , payments made by the borrower and regulated entity and interest rates or changes to interest rates applied and charged If a third party is involved, the borrower must be informed of the appointment in terms of its credit facility agreement, the role of the third party must also be explained to the borrower vii. Applications for credit A regulated entity should; Publish information on its website and ensure borrowers have knowledge of the regulated entity dealing with lending. This includes that the borrower is entitled to a meeting with the regulated entity, timelines for credit applications , information about government support schemes and description of security Acknowledge credit applications within 5 working days Gather and record information from the borrower and judge whether credit is appropriate to that borrower Offer a credit facility agreement when it has satisfied the credit is suitable and the borrower is able to repay the debt over the course of the credit facility agreement If the regulated entity does not make a decision within 15 working days then the borrower must be informed of the reasons why and information must be provided viii. Security (Guarantees) If a regulated entity seeks security ( to include a guarantee) to support an application this must be reasonable and proportionate. The regulated entity must provide the borrower with information concerning why this security was required and the repercussions for the borrower in providing this security. The explanation must include a warning in specific terms for non personal guarantees and a further form of warning for personal guarantees. If the regulated entity makes an offer of credit to a borrower subject to guarantee a guarantee document must be provided which would include the relevant obligations of the guarantor. A regulated entity in realising security, the guarantors must also receive information so that they are aware of the level of residual debt. Where a Borrower is in financial difficulties: guarantors will also receive ( where the borrower is a micro and small enterprise ) notification when that borrower goes into financial difficulties. ix. Refusing or withdrawing credit If a regulated entity refuses a borrower’s credit application it must inform the borrower and provide relevant information including: The reasons for the application’s refusal and the specific parts of the application which were refused How to appeal an application The borrower’s rights to make a complaint x. Arrears The regulated entity must offer the borrower with the option of an immediate review of the credit facility agreement, alternative agreements and security If the borrower agrees to the review the regulated entity must perform this review and identify the options available to the borrower and address the borrower’s likely arrears or areas of financial difficulties The regulated entity should inform the borrower of the outcome of the review If a borrower remains in arrears for 15 working days the regulated entity should contact the borrower The regulated entity should contact the borrower and confirm it is in arrears and inform the borrower of the outcome of the assessment xi. Financial difficulties A regulated entity should maintain policies for dealing with borrowers who may be in financial difficulty and should aim to assist the borrower to resolve financial difficulties and provide information; On the procedure that the regulated entity will apply and how it plans to implement this Information to evaluate the financial situation of the borrowers The types of alternative arrangements and the criteria which the regulated entity will apply when considering which alternative agreement is appropriate to a borrower The borrower must be made aware of the extra fees for borrowers in financial difficulties A regulated entity should make available information to borrowers information concerning; The procedure for dealing with borrowers in financial difficulties An explanation that the regulated entity may offer the borrower an alternative agreement to help resolve the financial difficulties, may be entitled to impose additional fees or charges The type of criteria which could apply to the borrower’s financial difficulties A statement issued stating the financial difficulties may impact on the credit rating Communication with borrowers should be carried out to give the borrower sufficient time to complete an action and not in an aggressive manner. The regulated entity should state the implications of not co-operating to the borrower. The regulated entity must ensure that within 10 working days it informs the borrower of the status of the account, applicability of above regulations, impact of the difficulties and an optional review of the borrower’s credit facilities. xii. Independent reviews The regulated entity should provide the borrower with reasons for the review, the cost of the review and information on what would be covered by review. The cost of the review should be proportionate to the amount of credit provided under a credit facility agreement. xiii. Alternative arrangements A regulated entity should include information concerning the timeframe for the borrower, the new repayment amounts, the relevant implications, the frequency of review, the application of interest and charges When an alternative arrangement terminates, the regulated entity must review the circumstance of the borrower to assess the need for another alternative arrangement. xiv. Appeals A regulated entity shall establish and implement internal appeals procedures allowing a borrower to appeal various decisions of the regulated entity including the refusal of credit applications or the withdrawal of a credit facility The appeals should be conducted in such a way that is carried out without prejudice and the borrower should be informed on how long it will take to make a decision and the reasons as to why it may take longer. xv. Handling complaints A regulated entity should try to resolve complaints between borrowers and adhere to correct and proper procedure when dealing with these. This would include that the regulated entity must acknowledge the complaint and provide the borrower with the name of the person in relation to the complaint A regulated entity must resolve a complaint within 40 working days and provide regular updates to the borrowers including the outcome of the investigation and the offers of settlements For medium-sized enterprises complaints must be resolved in satisfaction in at least 5 working days xvi. Records and compliance A regulated entity should prepare and maintain records for credit and relating to applications which have been refused and should ensure when dealing with borrowers it employs effectively its resources © Paul Foley and Andrew Clarke, McKeever Solicitors, 30th July 2016 This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further information, please contact Paul Foley or Andrew Clarke. https://www.mckr.ie/insights/news-and-publications/the-sme-regulations-2016 https://www.mckr.ie/insights/news-and-publications/the-sme-regulations-2016 Sat, 30 Jul 2016 01:00:00 +0100 www.mckr.ie New EU Succession laws: Re-write your Will Different national legislation governing inheritance has made the issue of succession highly complicated where people own properties in more than one country. Those differences frequently led to conflict of law problems for property owners. However, the introduction of new EU legislation has simplified cross-border succession. Different national legislation governing inheritance has made the issue of succession highly complicated where people own properties in more than one country. Those differences frequently led to conflict of law problems for property owners. However, the introduction of new EU legislation has simplified cross-border succession. The European Regulation (EU) No 650/2012 applies local succession laws, of the country where the person usually lives, to the distribution of their estate. Furthermore a standard form, the European Certificate of Succession has been introduced to enable heirs, legatees, executors of wills and administrators of the estate to prove their status and exercise their rights or powers in other EU countries. The Regulation also allows citizens to choose to apply the succession laws of their country of nationality to pass on property on their death save if the property is situated in the UK, Ireland and Denmark. These rules are only applicable to deaths occurring on or after 17 August 2015. Citizens of the UK, Ireland and Denmark who own property in other EU countries which have adopted the Succession Regulation can now benefit from the legislation and can now elect to apply the law of Ireland to their EU property. The new regulation allows Irish citizens to avoid applying some form of forced heirship which most EU member states have. For example France has strict inheritance rules that children have certain rights to their deceased parent’s estate. This is great news for Irish owners of foreign (EU) properties who wish for it to be passed on after their death as we can now make wills to apply Irish succession laws to property situated in most of the EU (save for the UK and Denmark). If you have already made a Will you should change it to take in to account the new Regulations. This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For more information please contact Robert Browne or Helen Sweeney. https://www.mckr.ie/insights/news-and-publications/new-eu-succession-laws-re-write-your-will https://www.mckr.ie/insights/news-and-publications/new-eu-succession-laws-re-write-your-will Fri, 29 Jul 2016 01:00:00 +0100 www.mckr.ie All You Need is Love (and a Pre-Nuptial Agreement) As Paul McCartney found out, sometimes love isn’t all you need. So how can you ensure your assets are protected if your marriage breaks up? As Paul McCartney found out, sometimes love isn’t all you need. So how can you ensure your assets are protected if your marriage breaks up? Pre-nuptial agreements are becoming more popular in Ireland since the legalisation of divorce in 1996, particularly amongst parties who are marrying for the second time. Pre-nuptial agreements are, as the name suggests, entered into and signed prior to marriage enabling couples to mutually decide the distribution of their assets. Although these agreements are not legally binding there are a number of factors which influence the weight attached to them by the Irish Courts. The aim of these agreements (along with the ante nuptial agreement) is to provide a solution in the event of a breakdown of marriage or upon the death of one spouse. Parties therefore usually before their marriage, agree to the distribution of assets in the event of their marital breakdown. The content of each prenuptial agreement varies such that they may also agree to other matters such as custody, pensions and the renunciation of rights. For example, a spouse may renounce their right to maintenance or their legal share right1, as per section 113 of the Succession Act 1965. Unlike the majority of European and common law jurisdictions pre-nuptial agreements are not automatically recognised or legally binding in Ireland. In fact they are neither expressly allowed nor forbidden by our legislation. As a result, the court when considering the grant of ancillary relief2 is not obliged to give effect to pre-nuptial agreements. So how can you ensure your assets are protected if your marriage breaks up? However, an agreement may act as guidance in judicial separation or divorce proceedings and may often be referred to so as to give a guide to the Court as to the intention of the parties when they entered into the marriage. However the Court can look beyond the terms if they deem appropriate and do not have to take the terms into account at all. To date there has not been much case law in Ireland dealing with the significance of pre-nuptial agreements. They have been raised from time to time in the context of Separation or Divorce cases however there has been no particular case that refers to prenuptial agreements nor are there any guidelines for the Court to follow. It could be said from Irish case law that pre-nuptial agreements have persuasive effect only. However, there have been a number of relevant cases in the United Kingdom, which are persuasive authority here, indicating the approach the Irish Courts may take. In the case of MacLeod v MacLeod3 it was found that “the court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement." The fairness of an agreement is determined by Courts on a case by case basis. This allows the Court to use their discretion based on the facts of the case. However, some guidance as to ‘the approach that a court considering ancillary relief should adopt towards an ante-nuptial agreement between the parties’ has been provided in the English Supreme Court case of Radmacher v Granatino4. In Radmacher the Supreme Court found that pre-nuptial agreements can have “decisive weight” after consideration of the following: if there is a minor in the family (as their welfare must be provided for) what non-matrimonial property existed at the time of agreement and what exists now circumstances at the time of the agreement and any subsequent change in circumstances whether each party is currently in a position to meet their needs the terms of the agreement, including whether proper provision for both spouses is made whether any vitiating factors5 or unconscionable/unworthy conduct are present the parties’ emotional states at the time of the agreement The Court expressly agreed that the old rules, which considered pre-nuptial agreements as contrary to public policy, are now obsolete. The Court will try to respect the individual autonomy of the couple, respecting that they are free to make their own decisions on what they believe is best for them. However, questions have arisen as to the contractual nature of the agreements which would be binding and enforceable by the Courts in another context. Even if the agreement does not have contractual force, some factors will negate any effect the agreement might otherwise have. It was therefore suggested in Radmacher that a number of precautions can be taken by parties to help ensure that the Courts will regard their agreement and afford appropriate weight to such. These precautions are similar to those recommended by the study group formed by the Irish Government in December 2006, tasked with making recommendations for the change considered necessary6. The precautions are as follows: the receipt of independent legal advice by both parties (which is particularly persuasive) proof that the agreement was entered with informed consent because for ‘an ante-nuptial agreement… to carry full weight, both the husband and wife must enter into it of their own free will, without undue influence or pressure, and be informed of its implications’7 full and frank disclosure of any assets, property or liabilities of both parties proof that it was the intentions of both parties that the agreement be effective i.e. a signed acknowledgement that the pre-nuptial agreement would be legally binding the parties must have had time to consider the agreement (ideally not less than 28 days prior to marriage) the inclusion of a review clause providing for periodic reviews to accommodate for significant changes in wealth or circumstances, the birth of a child/children etc. Without periodic reviews the Court will most likely disregard the pre-nuptial agreement on the basis that it is no longer relevant to the circumstances and position of the parties. Therefore, the shorter the marriage duration the greater possibility that the agreement will be noted. The legal uncertainty surrounding the status of pre-nuptial agreements has been subject to scrutiny with many requests, from both the legal profession and general public, for reform and legislative intervention. as highlighted in the case of Paul McCartney and Heather Mills. There is potential that the Study Group’s core recommendation will be implemented so that separate provision is made in both the Family Law Act 1995 and Family Law (Divorce) Act 1996 to provide that the courts regard existing pre-nuptial agreements when making ancillary relief orders. The recent Children and Family Relationships Act 2015 may further support the need for such provision as it is clear that Family Law is attempting to keep up legislatively with the changes in how families and couples live their lives on a daily basis and it is not only the traditional marriages that the legislation now seeks to protect. Although many do not see pre-nuptial agreements appropriate when entering a life-long commitment with their partner choosing to forgo a pre-nuptial agreement may not be the best option for the wealthy couple, as highlighted in the case of Paul McCartney and Heather Mills. After a relatively short marriage of 5 years Heather received a substantial percentage of the combined assets and a generous monthly maintenance allowance from Paul, much to his disadvantage. Until legislative intervention occurs one cannot be certain as to what extent the Court will regard pre-nuptial agreements, or whether they will consider them at all. But if the above precautions are taken the agreement will most certainly be more persuasive than not in this jurisdiction. Copyright © Emma Fleming, McKeever Solicitors, 19th May 2016 This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further information please contact Cliona Costelloe or Emma Fleming. 1 A legal right share of a spouse is their automatic entitlement to a share of the deceased spouse’s estate regardless of whether there is a valid will. If there is no children the surviving spouse is entitled to 50% of the deceased’s estate. If there are children the surviving spouse is entitled to 1/3 of the estate. 2 Financial relief following the petition for judicial separation or divorce 3 [ 2010 ] 1 AC 298 4 [ 2010 ] UKSC 427 5 For example duress or undue influence 6 Report of the Study Group on Pre-nuptial Agreements. justice.ie 7 Radmacher v Granatino para 68 https://www.mckr.ie/insights/news-and-publications/all-you-need-is-love-and-a-pre-nuptial-agreement https://www.mckr.ie/insights/news-and-publications/all-you-need-is-love-and-a-pre-nuptial-agreement Fri, 20 May 2016 01:00:00 +0100 www.mckr.ie Defective Products Liability in Ireland In February 2016, Mars Inc. recalled chocolate bars across fifty-five countries after a piece of red plastic was found in a Snickers bar in Germany, likely leading to millions of Euro in losses. Although only one bar was found to have been affected, Mars Inc. decided to take precautionary action to protect itself. In February 2016, Mars Inc. recalled chocolate bars across fifty-five countries after a piece of red plastic was found in a Snickers bar in Germany, likely leading to millions of Euro in losses.1 Although only one bar was found to have been affected, Mars Inc. decided to take precautionary action to protect itself. Awards for damages caused by defective products can be high, even for relatively minor claims. In the recent Irish case of Duhy v Ralph Lauren, a five year old was awarded €17,500 after suffering injuries from the elastic on an outfit which caused red marks on her legs, although the only treatment for the injury was the application of Bio Oil.2 Product liability is the area of law where manufacturers or vendors are responsible for their products and any damage caused by them. Generally speaking, there are three means by which parties can seek legal recourse: contract law, negligence, or statute. Where there is a contract between the parties, consumers can expect the product to be of a certain standard. The main piece of legislation in Ireland dealing with the quality of goods purchased under contract is the Sale of Goods and Supply of Services Act 1980.Awards for damages caused by defective products can be high, even for relatively minor claims The law implies certain terms into a contract requiring goods to be of “merchantable quality” as well as safe and fit for purpose. If these terms are breached, the purchaser may sue for breach of contract. However there are many cases where there is no contract, and the injured party must seek recourse by other means. In Ireland this has usually meant bringing an action for negligence. The modern law of negligence can be traced back to 1932 in Scotland, when a woman named May Donoghue went to a café where her friend purchase a ginger beer for her. Mrs. Donoghue fell ill after consuming the beverage, apparently because the remains of a dead snail were in the bottle. At the time she had no legal recourse against the manufacturer because her friend had purchased the ginger beer for her; there was no contract between her and the manufacturer. However, the court held that the manufacturer was liable irrespective of the absence of a contractual relationship because he owed a “duty of care” to her and that duty had been breached. This duty arose where the harm was reasonably foreseeable; in that case, the defendant’s failure to find an effective cleaning system for the bottles made it reasonably foreseeable that consumers could suffer and that snails could find their way in to the bottles. The standard of care expected from a manufacturer or vendor will depend on the type of product, and courts will consider the likelihood of injury, the seriousness of the potential injury, and the social utility of the product. For example, with pharmaceuticals, there are often unknown side effects and risks. In one recent Irish case a woman named Lorna Savage took an action against Pfizer for negligence when she developed a serious condition that left her in a wheelchair after taking a steroid produced by the company.3 After the introduction of the Liability for Defective Products Act, 1991 (the “1991 Act”) this area now has the benefit of a statutory, strict liability regime. The Act does not replace other remedies, but provides another form of redress for victims of defective products. One of the main advantages of the Act is the broad definition of “producer.” The Act provides a remedy for consumers against various parties involved in the manufacturing and distribution process. Producers who may be found liable include manufacturers of finished products or component parts or raw materials, and processors of agricultural produce. This can also be extended to importers where the producer of a product cannot be identified. To make a claim it must be shown that the resulting injury or damage is due to a manufacturing or design error which should have been identified before the faulty product was placed on the market. The injured party has the onus of proving the damage, defect and the causal link between the two. Under the 1991 Act a product is defective where it fails to provide the safety a person is entitled to expect, taking all circumstances into account, including the presentation of the product, the use to which it can be reasonably be expected to be put, and the time it was put into circulation.Liebeck was awarded $160,000 in compensatory damages and $2.7 million in punitive damages This does not mean that a product is defective just because there is a better product on the market, but at the very least the standard of safety acceptable at the time must be considered. Manufacturers also have a duty to warn consumers about known hazards and dangers surrounding the use of their products, but even with warning labels, they can still find themselves vulnerable to claims. In the infamous McDonald’s hot coffee case in America, also known as Liebeck v McDonald’s Restaurants, Stella Liebeck sued McDonald’s after suffering third-degree burns when she spilled scalding hot coffee in her lap. Although there was a warning on the coffee cup, the jury decided that it was not legally “adequate.” Liebeck was awarded $160,000 in compensatory damages and $2.7 million in punitive damages, before the case eventually settled out of court pending an appeal hearing. The 1991 Act provides a number of defences, if it can be shown that: The producer did not put the product into circulation; The defect was not present when the product was put into circulation; The manufacturer was not producing or distributing the item for sale or any other economic purpose; The defect arose due to compliance with mandatory requirements of national or community law; or The state of scientific and technical knowledge at the time was such that the defect could not be detected. Copyright © Emily Ledford, McKeever Solicitors, 19th May 2016 This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further information please contact Robert Browne, Liz MacGinley, Sarah O’Donnell or Emily Ledford. 1 Mars recalls chocolate bars in 55 countries after plastic found in product. theguardian.com 2 Child awarded €17,000 due to thick Ralph Lauren elastic. irishtimes.com 3 Woman alleges Pfizer steroid left her in wheelchair. independent.ie https://www.mckr.ie/insights/news-and-publications/defective-products-liability-in-ireland https://www.mckr.ie/insights/news-and-publications/defective-products-liability-in-ireland Thu, 19 May 2016 01:00:00 +0100 www.mckr.ie Credit Guarantee (Amendment) Act 2016 The Credit Guarantee (Amendment) Act 2016 was signed into law earlier this year with the intention of encouraging lending, with a greater assumption of the risks associated with such being borne by the State. President Michael D. Higgins signed the Credit Guarantee (Amendment) Act 2016 into law earlier this year. The aim of the Credit Guarantee Scheme, enacted by way of the Credit Guarantee Act 2012, was to provide Small and Medium Enterprises that cannot access conventional financial facilities with an alternative method of financing their businesses. with the State taking an increased proportion of the risk associated with the lending This alternative financing initially came in the form of a state backed guarantee in which the state covered 75% of the finance provided to the business. Since the passing of the Act in 2012, approximately €45 million in credit guarantee loans have been sanctioned, with the average loan amounting to over €160,000 however, it was recognised that certain reforms were desirable in order to further encourage lending. The changes to the Principal Act under this amendment are: An increase in the amount that the state is in a position to guarantee from 75% to 80%. This comes on foot of a recommendation made by the Steering Committee following the conclusion of a review of the Scheme in September 2013. The primary aim of this is to redistribute the risk between the financial providers and the State, with the State taking an increased proportion of the risk associated with the lending. The amendment limits the annual amount of credit guaranteed by the State to €150 million. The definition of “finance provider” has been broadened so as to include providers of credit facilities, invoice credit facilities as well as other non-bank financiers. The definition of loan agreement has also been broadened so as to include invoice discounting, leasing and overdrafts. In this regard, credit card and other credit line facilities now come within the remit of a loan agreement The Minister may now provide counter-guarantees which will enable the Strategic Banking Corporation of Ireland to access matching guarantee facilities from EU lenders such as the European Investment Bank and the European Investment Fund. It is hoped that these reforms will have the effect of increasing the amount of credit available to SME’s in Ireland. Copyright © Alban O’Callaghan, McKeever Solicitors, 5th May 2016 This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further information please contact Alban O’Callaghan or Max McGahon. https://www.mckr.ie/insights/news-and-publications/credit-guarantee-amendment-act-2016 https://www.mckr.ie/insights/news-and-publications/credit-guarantee-amendment-act-2016 Thu, 05 May 2016 01:00:00 +0100 www.mckr.ie New Rights for Individuals in upcoming Data Protection Reform The General Data Protection Regulation due to become law later this year will spur businesses to review their data policies and procedures to ensure that they comply with the requirements of the new regulation. Doing business online gives Irish companies access to potential customers far beyond our own tiny domestic market. A recent survey indicates that 33 per cent of ecommerce revenue for Irish retail companies was generated internationally1. “But this doesn’t happen by chance”, the article goes on to say. It talks about the importance of search advertising for those competing for a slice of the global pie. However, preparation to enter the export market also requires awareness of regulatory structures likely to be encountered abroad, such as laws around treatment of personal data. National Data Protection Laws A business established here and which collects and processes personal data in the course of business is considered to be a “data controller”. Thus, it must abide by the Data Protection Acts of 1988 and 2003.2 But for those companies engaging in business in other EU countries, there is room for confusion. This is because, depending on how the business is set up, the data protection rules in other Member States may apply and these rules differ somewhat from State to State. Laws in Other Member States Legislators interpreted the Data Protection Directive [95/46/EC] differently when incorporating it into national legislation. This has led to variations in the laws on data protection from Member State to Member State. This places a considerable administrative burden on the data controller of a company which operates or wishes to expand its business outside its own country e.g., in having to fulfil the notification requirements to national Data Protection Authorities. In recent decisions, the European Court has given further clarity on how to decide if a business based in one country, is bound by the data protection laws of another Member State. If a company is found to be “established” in a Member State, implying “the effective and real exercise of activity through stable arrangements”3 e.g., if it uses equipment, domain names, or advertises and/or has a representative or a bank account in a State, then it will find itself subject to that State’s data protection laws. It is noteworthy that wherever a complaint is made, the national Data Protection Authority is entitled to investigate it, although it cannot impose penalties. If it finds that a breach has occurred, it must request that the matter be taken up by the supervisory authority in the State where the errant company is established. The new General Data Protection Regulation: Benefits for Business Consider how much the digital world has changed in the twenty odd years since the 95/46/EC Directive, with mobile technology, social media, cloud computing, smart cards not even envisioned back then. Europe must belatedly try to catch up with data protection legislation for commerce and to ensure rights to privacy are properly protected. And now, with political agreement reached in December 2015 on the European Commission’s proposed new General Data Protection Regulation, there may be light – and it is hoped more clarity – at the end of the tunnel. The Council is due formally adopt it in April 2016 after which the Parliament will vote on it, to be followed by a two year implementation period.4 The regulation itself will become law in all Member States, obviating the need for it to be interpreted into domestic legislation. This should leave less scope for national variation and nuance. The Regulation is being heralded by the European Commission as a “one-stop-shop”, referring to the necessity for a company to deal with one supervisory authority only, in the State where the company is established. That authority would be competent to deal with all of that company’s data protection issues relating to its activities in all Member States. Where there are cross-border issues to be decided, the authority where the company concerned is established would be the ‘lead supervisory authority’. However, it is envisaged that, in such cases, the opinion of the European Data Protection Board would be sought, so as to have consistency and harmonisation in enforcement of the regulation. This Board has yet to be constituted and established. The separate office of the European Data Protection Supervisor (EDPS), already in existence, is to provide its secretariat.5 Giovanni Butterelli, the Supervisor appointed in December of last year, aims to have a key role in the workings of the new regulation, saying that “everything is down to the details – each word can change a lot.”6 Companies based outside the EU, but who engage in business in Europe, will have to abide by the proposed regulation, providing a more level playing field. The possibility of fining a company in a Member State for “the sins of its [for example – US] parent” brings pressure to bear on international commercial goliaths found to be in breach of the data protection laws of individuals inside Europe’s borders.7 The aim of the General Data Protection Regulation is to strengthen privacy rights of individuals. This may increase the workload of data controllers in some respects, but in the wider context, the new legislation will be set as a cornerstone for the anticipated single market in digital services. “The digital future of Europe can only be built on trust,” according to Andrus Ansip, vice-president of the Digital Single Market.8 The majority of EU citizens are concerned about the use to which their personal data is put by internet service providers.9 If the regulation boosts confidence in the control and safety of personal data, it is likely to lead to increased commercial activity online. Europe’s image as a safe place to do business will be of huge benefit to business in tapping the rest of the global market as well. The Regulation’s Benefits for Individuals and Consumers: ‘the right to be forgotten’ These rights for individuals will include the ‘right to be forgotten’, where a person can ask for his/her outdated, incorrect or irrelevant data to be deleted, where there are no grounds for it to be kept. Valid grounds for retention of data include data held under a contractual or legal obligation or information that is in the public interest. The ‘right to be forgotten’ will be welcomed by people who may have shared information online, perhaps as children, and who were not fully aware of the implications of doing so at the time. The encoding of this new right in the regulation comes in the wake of the controversial Google Spain decision on ‘the right to be forgotten’ by the European Court10 and of the intriguing case of Dan Shefet. In that case, the Tribunal de Grande Instance in Paris ruled in September 2014 that the search engine, Google, had to remove links to defamatory postings about Mr Shefet, a Paris lawyer, which postings falsely alleged that he had lost his licence to practice law among other things. The court imposed daily fines of €1,000 in default.11 Google, being a search engine, does not have a right to remove the defamatory postings themselves, only the links to them. Google had already launched a removal of links request process on 29 May 2014. Presumably this was in response to the Google Spain decision, apparently accepting its duty to take down defamatory material. Other search engines have followed suit. Google then sought legal advice and guidance from data protection authorities on its protocol for acceding to such requests. It even had an Oxford professor of philosophy and ethics of information on its think-tank panel.12 Recently however,13 Google has been ordered by the UK’s Information Commissioner to take down new links about links it had removed already on foot of a request by the data subject. The stories about links being taken down may be newsworthy but must not appear in search results for the data subject’s name, according to the Deputy Commissioner, David Smith.14 So, what a search engine cannot do is to directly link news of links being removed back to the original article or the individual concerned. However, there remains the tricky problem of the application of ‘the right to be forgotten’ to internet domains outside the reach of EU Law. Individuals more in control of Personal Data Under the new Regulation, data subjects will have more control of their personal data. They will be entitled to information about the purpose for which their data is being kept. Individuals will have a right to “data portability”, meaning that a data controller will be obliged to give back personal data in a format that can be accessed by another company. It is envisaged that this will benefit consumers as well as smaller companies who wish to break into markets currently dominated by big multinationals. Where data has been hacked, giving rise to a high risk to personal data, the individuals concerned must be notified by the data controller as soon as possible. There will be a requirement to incorporate into products and services “data protection by design and by default”, so that the default settings will be pro-privacy.15 Data controllers will be encouraged to adopt technology that allows for anonymisation, ‘pseudonymisation’ and encryption of data. This may result in that data being available for use in “big data” analysis, such as for statistics for research and so on, while keeping data subjects anonymous. There is growing concern in this digital age that we, as individuals are being treated almost as commodities. Our own online data is being used for marketing purposes to direct products and service back to us, giving credence to the phrase “data is the new oil.” The EDPS has established an Ethics Advisory Group to consider how we can embrace new technology and use it in ways that ensure that human rights such as human dignity and privacy are respected “so that individuals are no longer reduced to mere data subjects in the digital environment.”16 This involves finding the delicate balance between the common good and a person’s rights as an individual and the need for consent. It is hoped that its work will extend into areas such as the ethical issues arising out of the proposed new Directive on a harmonised approach to recording of European flight passenger names, national smart medical cards and the way in which personal data may be used in “big data” projects. The Police Directive A new data protection directive relating to policing and criminal justice will also come into force. It will provide a framework for the efficient flow of information between the policing and judicial authorities both domestically and across European borders about individuals such as criminals, suspects, victims or witnesses.17 Increased Powers for Supervisory Authorities Data Protection Authorities are to be granted stronger powers and higher budgets: the budget of Ireland’s Data Protection Commissioner will rise by nearly 50% and her staff will increase from 29 to 50.18 The supervisory authorities will be able to levy hefty financial penalties on companies in breach, of up to €20 million or 4% of their annual global turnover, whichever is greater. It may be worth considering the merits of the Commissioner’s office being or becoming self-funding through the fines it imposes, with some surplus going to the Exchequer. This arrangement could provide the authority with room for growing its policing role. The workings of the proposed European Data Protection Board are as yet unclear, but it is likely that its decision-making role on issues affecting several Member States will make the laws more cohesive. Hopefully this will streamline the decision-making process so that companies can expect timely and consistent information on compliance. Copyright © McKeever Solicitors, 12th April 2016. This article is a general review of the law and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further queries about data protection, please contact Robert Browne or Ciara Meskell. 1 “How do Irish ecommerce companies fare abroad?” Laura Slattery irishtimes.com. 30 April 2015 2 Data Protection Act, 1988 and Data Protection (Amendment) Act 2003. 3 Weltimmo s.r.o. v Nemzeti Adatvedelmi es Informacioszabadsag Hatosag, C – 230/14. Judgment of the Court (Third Chamber) of 1 October 2015, EU:C:2015:639 4 European Commission: Fact Sheet, Brussels, 21 December 2015 5 “When super-regulators fight: the ‘one-stop-shop’ in the proposed Data Protection Regulation”, Steve Peers, eulawanalysis.blogspot.com, 11 March 2015. 6 “EDPS hopes to become ‘centre of gravity for data protection’, Julie Levy-Abegnoli, The Parliament Magazine, 15 February 2016 7 “Google fined for not taking down “right to be forgotten” links worldwide.” naked.security.sophos.com, 19 November 2014. 8 “Agreement on Commission’s EU data protection reform will boost Digital Single Market.” European Commission – Press Release, 15 December 2015. 9 Ibid. 10 62012CJ0131 C – 131 Judgment of the Court (Grand Chamber) of 13 May 2014. EU:C:2014:317 11 “Still fighting for the right to be forgotten online”, Mark Scott, irishtimes.com, 5 February 2015 “Lawyer who won against Google takes privacy case to Brussels”, Julia Fioretti, 11 June 2015; “Google fined for not taking down “right to be forgotten” links worldwide”, Lisa Vaas, naked.security.sophos.com, 19 November 2014 12 “Ethical issues are tripping up tech firms and the backlash can be abysmal” Karlin Lillington, irishtimes.com, 11 February 2016 13 “Google ordered to remove links to stories about Google removing links to stories” Glynn Moody (UK), 21 August 2015 arstechnica.com. 14 “Google ordered to remove links to ‘right to be forgotten’ removal stories.” Samuel Gibbs, 20 August 2015 theguardian.com 15 “Questions and Answers – Data protection reform”, European Commission – Fact Sheet, 21 December 2015 16 “EDPS starts work on a New Digital Ethics”, Press Release, 28 January 2016, EDPS/2016/05 17 Ibid at 15 18 “Data protection reform increases Ireland’s role”, Pamela Newenham, irishtimes.com, 16 December 2015 https://www.mckr.ie/insights/news-and-publications/new-rights-for-individuals-in-upcoming-data-protection-reform https://www.mckr.ie/insights/news-and-publications/new-rights-for-individuals-in-upcoming-data-protection-reform Tue, 12 Apr 2016 01:00:00 +0100 www.mckr.ie Is there a role for Body Worn Cameras in security monitoring? Have you ever had that funny feeling that you are being secretly watched? Is it legal for others to secretly keep watch and record our movements? The answer to that is that it depends on where you are and what you are doing. Erosion of Privacy in the Modern Age Have you ever had that funny feeling that you are being secretly watched? Is it legal for others to secretly keep watch and record our movements? The answer to that is that it depends on where you are and what you are doing. In November 2015, Google Street View captured images of a woman in a compromising position (urinating in public!) on a side-street of a city in the Netherlands but unfortunately, failed to pixelate or blur the face, leaving her recognisable from certain angles.2 Recognisable images recorded by the Google car or indeed, any CCTV cameras, except those used in a private residence, are “personal data”. These recordings are subject to Data Protection laws, meaning that certain rules must be observed. Surveillance in public areas is a necessity for a number of reasons, such as, to prevent or combat crime and to safeguard the public. Is it legal for others to secretly keep watch and record our movements? The day after the ISIS terror attacks in Paris in November 2015, Army Ranger Wing troops patrolled the rooftops of Dublin’s Dundrum Town Centre. The troops were engaged in exercises in anticipation of the moderate threat of an ISIS attack on the busy south-side shopping centre.3 It is to be expected that the comings and goings of shoppers and others will be subjected to high level security monitoring. It seems that surveillance and recordings are here to stay. In February 2014, a District Court Judge was critical of a business that had not provided Gardaí with CCTV footage in support of its claim that an expensive mobile phone had been stolen from one of its premises.4 The CCTV footage was said to be “integral” to the prosecution of the case. Camera phones, body worn cameras (such as ‘the Go-Pro’) as well as drones (unmanned aerial vehicles) are now widely available. There is already a proliferation of fixed CCTV on our streets, in public buildings and in places of business. Many businesses may consider making use of new mobile devices for monitoring purposes. However, it is no easy task to achieve the proper balance between benefitting from technology’s marvellous advances, while taking care not to invade a person’s ‘private space’, even in public places. Businesses needs to accommodate and plan for the presence of these new monitoring devices. There is a very thin line between freedom of expression and the right to carry on a business, and the competing rights of individuals to privacy and data protection. Use of Mobile Camera Devices: Points to note: Where a business wishes to employ mobile camera devices, perhaps alongside more traditional CCTV systems, there are a number of points to bear in mind: The business is considered to be a “data controller” and is subject to the Data Protection Acts 1988 and 2003, (to be replaced by an EU Regulation, directly applicable throughout Europe and an EU Directive on data protection in policing matters, soon to be formally adopted by the European Parliament and Council and then implemented over a two year period.) It is important to know that individuals are entitled to data protection and that they have a right to privacy, guaranteed by EU law. Thus, the use of image recording must be for justifiable reasons in that it must be necessary, proportionate and lawful. The use of body worn mobile camera devices in the work-place should be limited to use “in response to specific pre-defined criteria, where it could be justified for security and safety purposes”.5 Recently Ireland’s Data Protection Commissioner, issued guidelines on the use of body worn cameras. As a general rule, the security or protection of a company’s property or assets are acceptable reasons for monitoring. It is unacceptable, according to the Commissioner, to record sound or voices even where employees or members of the public are aware that audio recording is taking place. It represents too much of an intrusion into privacy to be justified. Accordingly, audio recording functions should be switched off or disabled. If image recording is taking place, the subject(s) of the recording should be made aware of it by means of conspicuous signs, or an announcement by the operator of the device that recording is taking place. Also, the operator wearing the device should be in plain sight. Training the operator is necessary to ensure that he/she is aware of the issues of proportionality, that the recording be limited to a specific incident and for a specific purpose, and transparency i.e., that subject(s) be made aware that the recording is being made. The recording should not be prolonged and should continue only for as long as the incident lasts. It is not permissible to constantly video staff as they go about their work: “Under no circumstances should the recordings be used to monitor staff in their general duties,”6 according to the Commissioner. A business becomes a data controller when it records and processes personal data in the form of images. It then has a duty to protect that data. With regard to processing and storage of CCTV footage, the data controller must ensure that access to it is limited to authorised persons only, and that it is kept securely. Consideration should be given to applying a pixelated or blurred filter and/or to encryption of data. Footage should be destroyed as soon as the purpose for which it was gathered has been accomplished. If a person who is an identifiable subject of a recording (a data subject) requests a copy of it, it must be made available, or ‘stills’ of any recording be produced if it cannot be copied. Others visible and recognisable on the recording must be blurred by the data controller, so as to make them anonymous, unless their consent has been given to its unedited release. The costs associated with this manipulation of footage to be borne by the data controller could be exorbitant. A business should put in place a clear policy on the length of time for storage of footage, depending on the purpose for which it was collected. For example, video or photographic evidence of events such as ‘slips and trips’ can be of huge assistance to a company in providing an accurate record of events to enable liability/contributory negligence to be properly investigated. Retention policies need to take account of the possibility that such footage may need to be examined some days or even weeks after an incident, which may have gone unreported at the time. Clearly, when an incident is known to haves taken place, the footage must be retained. Risk and Privacy Impact Assessments In this regard, it is vital that businesses carry out a thorough review of their Data Protection policy to include a Risk Assessment and a Privacy Impact Assessment on the specific need for, and the protocols around, the operation of body worn cameras or mobile cameras before they are put into use. Security Companies Where a business engages an independent security company (a data processor) to perform its security surveillance, it has a duty to ensure that its contract with the security company contains clear terms of reference to ensure that its methods of surveillance are appropriate and lawful. Drones The operation of drones over 1 kg, requires registration with the Irish Aviation Authority according to recent new laws. A drone cannot fly over an assembly of people or over urban areas. An operator of a drone over 4 kg must undergo safety training.7 Copyright © McKeever Solicitors, 5th February, 2016. This article is a general review of the law and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further information, please contact Ciara Meskell. 1 independent.ie, 18 October, 2013 2 Source: independent.co.uk 3 November 2015 3 sundayworld.com 25 November 2015 4 herald.ie 13 February 2014 5 Guidance on the use of Body Worn Cameras, Data Protection Commissioner, December 2015. dataprotection.ie 6 Ibid 7 Irish Aviation Authority (Small Unmanned Aircraft (Drones) and Rockets) Order 2015 https://www.mckr.ie/insights/news-and-publications/is-there-a-role-for-body-worn-cameras-in-security-monitoring https://www.mckr.ie/insights/news-and-publications/is-there-a-role-for-body-worn-cameras-in-security-monitoring Fri, 05 Feb 2016 00:00:00 +0000 www.mckr.ie The Workplace Relations Act 2015 The Workplace Relations Act 2015 (“the Act”) commenced 1 October. The Act provides for changes to the bodies and procedures concerning resolution, mediation and adjudication of industrial disputes and complaints about breaches in employment legislation. The Workplace Relations Act 2015 (“the Act”) commenced 1 October. The Act provides for changes to the bodies and procedures concerning resolution, mediation and adjudication of industrial disputes and complaints about breaches in employment legislation. What you should know Why? Major reform of the State’s employment rights and industrial relations structures; When? Commenced on 1st October, 2015; What? The former five State bodies have been replaced by two. The Workplace Relations Commission (WRC) will deal with all cases at first instance, with appeals going to a new expanded Labour Court; Interim measures. Complaints lodged after 1st October, 2015 will go to the WRC. The LRC and EAT will be dissolved when legacy first instance complaints and appeals referred to them prior to the 1st October 2015 have been disposed of; Time limits. Time limits the same for all first instance claims and all appeals across the full range of employment rights legislation. Claims are to be lodged within 6 months of the breach, extendable to 12 months for reasonable cause. Appeals must be lodged within 42 days of the decision being appealed; Complaint Form. A single user-friendly online Complaint Form to be completed for one or multiple claims, by selecting from a drop-down menu of options, namely :- Pay Hours of Work Terms and Conditions of Employment Unfair Dismissal Industrial Relations Issues Discrimination / Equality / Equal Status Penalisation Whistleblowers Redundancy / Insolvency Protection of Young Persons at Work Minimum Notice Transfer of Undertakings Fixed Term and Part Time Work Parental, Carers, Maternity and Adoptive Leave Agency Working Early Resolution Service. In simpler cases, to resolve disputes at an early stage and without recourse to inspection or a hearing, a voluntary and confidential Early Resolution Service will be offered by Case Resolution Officers which will not impact or delay any inspection or hearing; Mediation Service. In more complex cases, to resolve disputes at an early stage and without recourse to a hearing, a voluntary and confidential Mediation Service involving face-to-face mediation will be offered by Mediation Officers, which will not impact or delay any hearing; WRC. All claims will be dealt with in a single private hearing before one WRC Adjudication Officer at the WRC. Parties may represent themselves or choose to be represented. It is possible in some cases, if the parties are in agreement, to avoid an oral hearing and have the case decided on the basis of written submissions. Otherwise submissions are taken from the parties but evidence is no longer taken under oath. The Adjudication Officer can summons witnesses and order production of documents to the hearing. WRC decisions will be anonymised and published on the WRC website; Appeal to Labour Court. All appeals go to the Labour Court except for Equal Status Acts complaints which are appealed to the Circuit Court. A Labour Court appeal will be a ‘de novo’ (fresh) hearing, held in public save where the complaint is one that raises confidential or sensitive issues. Decisions of the Labour Court will be published on the WRC website; Appeal to High Court. A Labour Court determination may only be appealed on a point of law. Such appeal would be to the High Court. Judicial review remains an option; Enforcement. Inspectors have been given wider powers and Compliance Notices and Fixed Charge Penalty Notices have been introduced. If a WRC decision is not appealed or implemented after 56 days, an application may be made by or on behalf of the Complainant to the District Court for an enforcement Order. If a Labour Court determination is not appealed or implemented after 42 days, an application may be made by or on behalf of the Complainant to the District Court for an enforcement Order. Failure to pay a compensation award is an offence and does, in the absence of proof of financial hardship, expose an employer to the risk of a Class A fine or up to 6 months in prison, or both; Public information. Single website (www.workplacerelations.ie) providing comprehensive information on employment, equality and industrial relations matters; Copyright © McKeever Solicitors, 30th November 2015. This article is a general summary on the subject and is not intended to be a thorough review or a complete statement of the law. Specific legal advice should be sought on a case by case basis. For further information please contact Andrew Clarke or Ciara Meskell. https://www.mckr.ie/insights/news-and-publications/workplace-relations-act-2015 https://www.mckr.ie/insights/news-and-publications/workplace-relations-act-2015 Mon, 30 Nov 2015 00:00:00 +0000 www.mckr.ie Repudiation of Insurance Contracts: New Reform of UK Law The UK Insurance Act of 2015 will come into effect in August 2016. It has updated the law relating to Insurance and has sought to strike more balance between Insurance Companies and Policy Holders. Hopefully the Irish legislature will sit up and take notice. The UK Insurance Act of 2015 will come into effect in August 2016. It has updated the law relating to Insurance and has sought to strike more balance between Insurance Companies and Policy Holders. Hopefully the Irish legislature will sit up and take notice. In Ireland there is a duty of disclosure to disclose facts which are material to the risk, to the insurer which policy holders seek indemnity in respect of. This is the more strict interpretation of the duty of disclosure. The Irish Law Reform Commission recommended retaining this duty of disclosure.duty of disclosure to disclose facts which are material to the risk However, the UK Insurance Act has now introduced a duty on a policy holder to make a fair presentation of the risk. Such disclosure requires every material circumstance which the insured knows or ought to know or, failing that, disclosure which gives the insurer sufficient information to put a prudent insurer on notice that it needs to make further enquiries for the purpose of revealing those material circumstances. The UK Act goes on to say that in the absence of enquiry from the insurer the duty of disclosure does not require an insured to disclose circumstances that the insurer knows or ought to know of, or that the insurer is presumed to know. This represents a huge shift towards the consumer in treating policy holders fairly. Additionally, the UK Act provides that the remedy for an insurance company for a breach of the new duty to make a fair presentation will be proportionate to the breach and will not allow the insurer to indiscriminately avoid the policy. This will in effect make insurers pay out on a pro rata basis, proportionate to the understatement of the risk. Irish Courts have been moving towards a more liberal interpretation of the duty of disclosure. However, now that the UK has taken such a great leap towards Consumer Protection, hopefully the Irish legislature will sit up and take notice. Copyright © Robert Browne, McKeever Solicitors, 12 November 2015. This article is a general review of the law on the subject of repudiation of contracts and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further information please contact Robert Browne. https://www.mckr.ie/insights/news-and-publications/repudiation-of-insurance-contracts-new-reform-of-uk-law https://www.mckr.ie/insights/news-and-publications/repudiation-of-insurance-contracts-new-reform-of-uk-law Thu, 12 Nov 2015 00:00:00 +0000 www.mckr.ie The Numbers Game Crowdfunding has been successfully harnessed for financing legal actions in other jurisdictions. But what about Ireland – does this relatively modern phenomenon have potential here? Published in the Law Society Gazette, Aug/Sept 2015. Crowdfunding has been successfully harnessed for financing legal actions in other jurisdictions. But what about Ireland – does this relatively modern phenomenon have potential here? https://www.mckr.ie/insights/news-and-publications/the-numbers-game https://www.mckr.ie/insights/news-and-publications/the-numbers-game Wed, 16 Sep 2015 01:00:00 +0100 www.mckr.ie Ireland’s Supreme Court Confirms Priority of Floating Chargeholders The Irish Supreme Court recently handed down a landmark judgment in the Belgard Motors Case. The case concerned whether a crystallisation notice had validly crystallised a floating charge, thus gaining priority over preferential creditors’ claims during liquidation. The Irish Supreme Court recently handed down a landmark judgment in the case of J. D. Brian Ltd [in liquidation] & Ors – v – Companies Acts 1 (the Belgard Motors Case). The case concerned whether a crystallisation notice had validly crystallised a floating charge, thus gaining priority over preferential creditors’ claims during liquidation. This overturns the previous High Court Decision. Prior to the High Court decision the rules of distribution of assets in liquidation proceedings were considered long established by way of Statute and case law. Traditionally, secured creditors (i.e. fixed chargeholders), the costs and expenses of liquidation 2 and preferential creditors have been reimbursed before floating chargeholders and unsecured creditors 3. However, if a floating charge had crystallised the secured assets would be excluded from the assets to be liquidated. In the High Court, Judge Finlay-Geoghegan focussed on section 285(7) of the Companies Act 1963 which states that where the ‘assets of the company available for payment of general creditors are insufficient to meet them, [they] have priority over the claims of holders of debentures under any floating charge created by the company’. Accordingly the Court found that the preferential debts would rank in priority to the chargeholder’s claim ‘irrespective of whether or not the floating charge crystallised prior to the commencement of winding up’. The Court also held that the crystallisation notice did not have the effect of crystallising the floating charge as the debenture was silent as to the rights and obligations of the Bank and/or company after its service. However, the Supreme Court interpreted section 285(7) differently and overturned the High Court’s decision. The Court held that the section does not refer to a ‘floating charge which has been converted into a fixed charge by virtue of express crystallisation’ 4 prior to winding up, as per the terms of the debenture. The Court was of the view that section 285(7)(b) would be effectively rewritten if preferential creditors could claim priority over debenture holders whose charges had crystallised prior to the commencement of winding up. Accordingly the Supreme Court found that floating chargeholders can gain priority over other creditors, including preferential creditors such as the Revenue. This can occur in cases where (1) there is an express crystallisation under the terms of the contract and (2) the chargeholders have provided notice of the crystallisation of the charge in writing to the chargee prior to the winding up of the company. The Supreme Court also addressed the effect of the crystallisation notice. They applied the principles laid out in Re: Keenan Brothers Limited 5 to determine that it had been the parties’ intention to restrict the Company’s use of the property and assets, which had been the subject of the floating charge, following the service of the crystallisation notice. This notice allowed the charge to crystallise over the company’s assets, thus enabling the creditor benefit from a fixed charge that provides debenture holders with proprietary interests which cannot be affected by liquidation. Banks of course will greatly welcome this decision and it should encourage them to provide capital in the knowledge that their credit may be secured by serving a crystallisation notice on the chargee in cases where they believe the assets are in jeopardy. It must be noted that Justice Laffoy highlighted a number of concerns associated with the ‘undoubtedly unsatisfactory outcome of this decision’ stemming from the wording of the Companies Act 1963, which the legislator failed to address in the Companies Act 2014. She indicated that legislative action may be required to rectify this oversight, but until then credit providers will benefit greatly. For further information please contact Andrew Clarke, Associate, McKeever Rowan at aclarke@mckr.ie https://www.mckr.ie/insights/news-and-publications/irelands-supreme-court-confirms-priority-of-floating-chargeholders https://www.mckr.ie/insights/news-and-publications/irelands-supreme-court-confirms-priority-of-floating-chargeholders Wed, 22 Jul 2015 01:00:00 +0100 www.mckr.ie Establishing a Charitable Trust in Ireland The Charities Regulatory Authority will determine whether or not an organisation is a charitable organisation, it is a matter solely for the Revenue Commissioners to determine whether an organisation is entitled to the various tax exemptions available to charities. Since the enactment of the Charities Act 2009 any charitable organisation that wishes to operate in the State is required to register with the Charities Regulatory Authority (CRA). This applies not just to charitable organisations such as Companies Limited by Guarantee but extends also to Charitable Trusts. An example of a Company Limited by Guarantee with a charitable objective includes organisations such as Cystic Fibrosis Ireland, Gorta and Concern. It must be noted that the while the Charities Regulatory Authority will determine whether or not an organisation is a charitable organisation, it is a matter solely for the Revenue Commissioners to determine whether an organisation is entitled to the various tax exemptions available to charities. The mere fact that an organisation does not generate a profit will not automatically entitle it to charitable tax exemption. Rather, the objects and actual activity of the organisation will be the primary focus of the Revenue Commissioners in assessing the organisations entitlement to tax exemption. A Charitable Trust is defined in the 2009 Act as a trust established for a charitable purpose. It requires the trustees to apply the property of the trust to the furtherance of its charitable purpose. It follows that the trustee is the legal owner of the property and is bound by the terms of the trust to apply trust property for the benefit of the beneficiary. Examples of a Charitable Trust include the Irish Heart Foundation and Leopardstown Park Hospital Trust. There are four classes of trust which have been accorded charitable status under Irish law; trusts for the, (1) relief of poverty, (2) advancement of education, (3) advancement of religion and (4) one which is beneficial to the community as a whole which does not fall under the other three headings. In the recent case of In the matter of the Charities act 1961 and in the matter of an Application by Christopher Carolan Executor of the Deceased’s Will v Gerald Jordan, Dorothy Keegan and James Jordan (unreported) [ 2014 ] IEHC 678, the presiding High Court Judge set out succinct examples of what would constitute a valid charitable trust in Ireland. He held that “[t]rusts for charitable purposes in the legal sense include trusts for the relief of aged, impotent and poor persons and such objects as are analogous thereto, and there can be little doubt that a trust for the relief of poor, aged, maimed and infirm officers and soldiers would ordinarily be regarded as a valid charitable gift.” This case concerned the application of the doctrine of cy-près to the last Will and Testament of the deceased. It was held that the wording of the will was not sufficient to infer general charitable intention and the court could not apply the doctrine of cy-près, resulting in the residuary estate of the deceased being distributed in accordance with the provisions of the Succession Act 1965. In registering a Charitable Trust applicants must disclose the charitable purpose for which the trust is to be established. The “charitable purpose” is the benefit it is intended to bestow on the proposed recipient. Under the 2009 Act, it is essential that the Charitable Trust is of public benefit i.e. not for a particular individual or individuals. In the case of Southwood v Attorney General, an English case concerning the establishment of a Charitable Trust for the advancement of education in the area of militarism and disarmament, Chadwick L.J. held that “it is not enough that the objects should be expressed to be the advancement of education; it is necessary that the advancement of education in the manner intended should promote public benefit”. In circumstances where the intended beneficiary is an individual, the appropriate trust to establish is a Discretionary Trust as opposed to a Charitable Trust. What constitutes “public benefit”? The authorities on this suggest that there must be a substantial amount of potential beneficiaries. There are exceptions to this rule such as trusts established with the intention of bestowing a benefit on members from a particular section of society. In this instance, the potential number of beneficiaries must be determinable. An example of such a trust is the Irish Rugby Football Union Charitable Trust which provides financial assistance to individuals who are permanently disabled as a result of an injury sustained in rugby. Such financial aid goes towards medical and care expenses necessary for the injured individuals. Alban O’Callaghan © McKeever Rowan 16th July 2015 This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further information please contact Helen Dillon at hdillon@mckr.ie or Alban O’Callaghan at aocallaghan@mckr.ie. https://www.mckr.ie/insights/news-and-publications/establishing-a-charitable-trust-in-ireland https://www.mckr.ie/insights/news-and-publications/establishing-a-charitable-trust-in-ireland Thu, 16 Jul 2015 01:00:00 +0100 www.mckr.ie Repudiation of Insurance Contracts The duty of someone completing a proposal form for insurance is to volunteer information to an insurance company where the information would appear to a prudent insurer to be material to a decision whether to accept a risk, and on what terms. The duty of someone completing a proposal form for insurance is to volunteer information to an insurance company where the information would appear to a prudent insurer to be material to a decision whether to accept a risk, and on what terms. It is rooted in the “special knowledge” of a risk as being likely to be solely in the possession of the proposer. In the Irish case of Manor Park Homes Builders Limited v AIG Europe (Ireland) Limited; the Court stated that there is a heavy onus of disclosure on the insured, otherwise the insurer would have great difficulty in assessing the risk or calculating the premium, but this “does not … mean that the insurer can cover its eyes or abstain from making normal enquiries or investigations”. The boundaries of the duty of disclosure in Ireland have not been clearly defined. We have the very strict approach of the Manor Park decision that the duty of disclosure does not depend on the proposer’s awareness of the existence of the duty. The proposer is under a duty to disclose material facts even if the insurer or broker fails to ask questions or the insurance is negotiated without the use of a proposal form. The Supreme Court decision of Chariot Inns stated that “a contract of insurance requires the highest standard of accuracy, good faith, candour and disclosure by the insured when making a proposal for insurance”. Any misstatement in the answers given when they relate to a material matter affecting the insurance, entitles the insurance company to avoid the policy and repudiate liability if the event insured against happens. But the correct answering of any questions asked is not the entire obligation of the person seeking insurance: he is bound, in addition, to disclose to the insurance company every matter which is material to the risk against which he is seeking indemnity”. The test is objective and not subjective. This rigid approach has been acknowledged as being a difficult standard to operate. The liberal approach in Irish Courts to the duty of disclosure was set out by the Irish Supreme Court in the case of Aro Road and Land Vehicles Limited v Insurance Corporation of Ireland 1986. In that case the Court considered that the underwriter had forfeited the right to insist upon full disclosure in circumstances where the proposer was not questioned about a particular matter. In the case of Coleman v New Ireland Assurance plc (2009), the Plaintiff had been diagnosed with MS but had not been informed by her doctors when she took out a Critical Illness policy. The court held that because she was not aware of the condition this did not amount to non-disclosure. The Irish Law Reform Commission has recommended retaining the duty of disclosure but restricting it to facts or circumstances of which the proposer has actual knowledge. The duty of disclosure has always been balanced by the insurer’s duty to investigate circumstances within the insurer’s competence and expertise. In some jurisdictions the duty of disclosure has been offset, or indeed removed altogether, by an insurer’s obligation to ask specific questions. In general, the effect of questions on a proposal form is to limit the duty of disclosure. In cases where the proposal form is not completed, some questions being ignored or the space for insertion of an answer being left blank, it may be that the inference to be drawn is that a negative answer was intended and an insurer who issues a policy without seeking additional information might be held to have waived the requirement of full disclosure. The provisional recommendation of the Irish Law Reform Commission in its 2011 Report was that “if a proposal form has been completed by the insured, insurers should not be permitted to say that a fact outside the scope of the questions asked is material and ought therefore to have been disclosed”. Insurers should be taken to have waived the duty of disclosure in regard to that fact. The Commission also noted that questions posed in writing should be drafted in plain intelligible language and that the questions should be specific to the information being sought. If there is a doubt about the meaning of a question, it should be interpreted by reference to a standard of what is fair and reasonable. If, following discovery of the proposer’s failure to disclose all material facts, the insurer elects to continue with the contract, the insurer may be held to have waived its right to avoid the contract, e.g. receipt of a premium. As we move into the digital era, the competition for business, the need for speed and over-the-counter or internet insurance may exclude insurers from relying on a proposer’s failure of disclosure. Copyright © Robert Browne, McKeever Solicitors, 28th April 2015. This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further information please contact Robert Browne at Robert Browne https://www.mckr.ie/insights/news-and-publications/repudiation-of-insurance-contracts https://www.mckr.ie/insights/news-and-publications/repudiation-of-insurance-contracts Tue, 09 Jun 2015 01:00:00 +0100 www.mckr.ie Legal Aspects of Investment based Crowdfunding Crowdfunding at its most basic level, is an open appeal to the public for funds for a specific project or for a specific objective. The range of companies using it is a lot wider than one might think. What is Crowdfunding? Crowdfunding at its most basic level, is an open appeal to the public for funds for a specific project or for a specific objective. Crowdfunding can be divided into two categories, the non-financial return category (donation based, pre-payment or rewards based (people give money to receive a reward, service or product)) and the financial return models (investment in return for the issuing of equity or debt securities or units in a collective investment scheme or the lending of money in return for a financial reward) all of which have different characteristics for those seeking the money and those giving the money. The concept of the non-financial reward model is not new and has been around for centuries: for example appeals made by charities to the public for funds to achieve certain common good objectives. Indeed, crowdfunding has been mentioned as an important future source of funds for charities. h2.The Emergence of Crowdfunding and for a vast arrange of projects Crowdfunding platforms have really started to emerge as internet technology has evolved to allow two way communication and interaction between members of the crowd and the company seeking funds and also because of the financial crisis. Crowdfunding is used to raise money rapidly. The range of companies using it is a lot wider than one might think: a biotech company, a medical device manufacturer, a medical diagnostics company, an online estate agency, a brewing company, a wine producer, tech companies, and online property portal companies have all used crowdfunding either to start up or scale up. Most recently crowdfunding is being used as a means to purchase property, allowing small investors get access to property investment. In its February 2015 review, the FCA commented that about 95% of the funded deals were eligible for the Enterprise Investment Scheme or Seed EIS Schemes. Investment based Crowdfunding Our focus here is on investment based crowdfunding which is the financial return model of crowdfunding and is internet based. This is where people, or companies invest directly or indirectly in new or established businesses by buying shares, debt securities or units in an unregulated collective investment scheme (securities). It is complex and of recent origin and is the category, along with loan based crowd funding that regulators are most likely to intervene. Investment based crowdfunding can provide capital to start ups and SMEs who might otherwise find it difficult to secure equity capital or loan funding from traditional sources. In investment based crowdfunding there are generally at least three parties, the company seeking finance for a specific project (the project owner), the intermediary providing the internet crowdfunding specific platform (platform) and the investors (who are not typically professional investors) forming part of the crowd who fund the project through the platform, communicate through the intermediary and then invest. Depending on the model used, the investor may acquire securities in the project owner either in his or her own name or through a nominee, provided by the intermediary. In another variant, the investor may acquire a security in a special purpose vehicle (SPV) or collective investment scheme (CIS). The SPV or CIS will in turn either hold securities in the project owner or have some other interest in the project owner. In terms of who does what, the intermediary through his platform provides services to the project owner which include a mechanism for the project owner to find potential investors and commitments from those who decide to invest. The intermediary may also provide assistance in developing the promotion for the platform, legal assistance with for example the preparation of the securities issue or acting as registrar for the issuer as to the ownership of securities. The project owner will pay a fee to the intermediary where the campaign is successful. Additional fees may also be payable to the intermediary for additional services. The intermediary may carry out limited due diligence on the project and in that context may limit the extent to which they take responsibility. Potential investors often have to register with the platform before accessing the full information on the promotion. Once the target amount is reached, the funds are transferred to the project owner or the issuer where the issuer is not the project owner, in return for the ownership of the security or, in some cases, beneficial ownership of rights in the security. A few platforms charge fees to investors as well as to project owners. Some platforms are within an appropriate regulatory framework where it applies and some structure the transaction so as to avoid regulation. The advantage where the transaction is structured to comply with a regulatory structure such as MiFID, is that passporting rights can be obtained, enabling the platform (assuming it is the authorised party) achieve economies of scale. Differing approaches to investment based and loan based crowdfunding have been taken by national regulatory authorities. Indeed some national authorities do not specifically regulate investment based crowdfunding. Whether specifically regulated or not, any project owner, issuer or intermediary would want to ensure, amongst other things, that they do not infringe company law and also either fit within an exemption to the Prospectus Directive or meet any applicable requirement to publish a Prospectus. The intermediary would also need to ensure investor funds were held and transferred by an authorised payment services provider and not by the intermediary. Risks with Crowdfunding The risks with investment based crowdfunding are significant, and include loss of some or all of the capital (and with no access to Investor Compensation Schemes), risk of dilution, lack of dividends, limited possibility to exit, minimal information about the project (when compared to investment in a listed firm), and the potential for investors to overestimate the amount of due diligence undertaken by the platform and the potential for conflicts of interest where the intermediary is remunerated by the investors and the project owner. FCA Regulation of Investment Based Crowdfunding The FCA have regulated investment based crowdfunding for some time on a limited basis if it involves a person carrying on a regulated activity in the UK such as arranging deals in investments or the communication of a financial promotion. However in 2014, the FCA changed its approach to specifically regulate firms operating investment based crowdfunding platforms. The aim was to make this market more accessible to retail clients, to help foster competition and to facilitate access to alternative finance options, while still aiming to ensure that only investors who can understand and bear the risks participate in the market. The changes are not expected to impact firms corporate finance businesses or venture capital businesses and firms carrying on regulated activities for professional clients. The new rules which in fact commenced October 2014, apply to the sale of non-realisable securities (in short unlisted shares or unlisted debt securities). Given the significant risks investors face when investing in unlisted securities that are hard to value independently or sell on a secondary market, the FCA require (in brief) that firms offering such investments on crowdfunding platforms (or using other media) promote only to certain types of investor. These are: professional clients, retail clients who are advised, retail clients classified as corporate finance contacts or venture capital contacts, retail clients certified as sophisticated or high net worth, or retail clients who confirm that they will not invest more than 10% of their net investible assets in these products. Where no advice has been provided to retail clients, the FCA apply the appropriateness test, so all firms (both MiFID and non-MiFID) would need to check that clients have the knowledge or experience to understand the risks involved. In February 2015 the FCA set out what its expectations are in relation to applications for the authorisation of crowdfunding businesses. The FCA encourages firms to (i) submit a suitable and detailed regulatory business plan (setting out the activities proposed and risks, budget, and resources); (ii) have adequate financial and non-financial resources; (iii) have a website that is either up and running or at a suitably advanced stage (including a test site or app, screen shots of a planned website or app that would demonstrate the user interface and functionality available to users) to demonstrate how it will operate should the firm be authorised; (iv) understand the FCA authorisation requirements and the permission profile they wish to apply for, (v) then submit a completed application including an outline of which regulated activities the firms plan to conduct. In the context of market supervision, the FCA emphasised, that were looking to see that platforms were disclosing all relevant information to enable potential investors to make informed decisions on whether or not to invest. This information must not be misleading. The FCA propose to carry out a full post implementation review of the crowdfunding market and regulatory framework in 2016 to identify whether changes are required at that stage. Given the lack as yet of a framework in Ireland for crowdfunding, but at the same time the existence here of a definitive legal framework for alternative investment funds which is complemented by the new Companies Act from the 1st of June, we have a solid base to build a framework similar to England for this innovative method of raising funds. © Copyright McKeever Solicitors, 15th May 2015. All rights reserved. This article is for information purposes only and must not be taken as legal advice or as a substitute for legal advice. If you have any queries on this article, please contact either Paul Foley, Partner or Andrew Clarke, Associate. https://www.mckr.ie/insights/news-and-publications/legal-aspects-of-investment-based-crowdfunding https://www.mckr.ie/insights/news-and-publications/legal-aspects-of-investment-based-crowdfunding Fri, 15 May 2015 01:00:00 +0100 www.mckr.ie New Sick Leave Holiday Entitlement Under current Irish legislation, employees do not accrue statutory holiday entitlement while absent on sick leave. The Organisation of Working Time Act 1997 awards holiday entitlement for time actually worked. Under current Irish legislation, employees do not accrue statutory holiday entitlement while absent on sick leave. The Organisation of Working Time Act 1997 awards holiday entitlement for time actually worked. That will soon change and employers may be exposed to holiday pay claims of up to 9 weeks pay from employees whose employment is terminated following a period of certified long-term sick leave. Section 87 of the Workplace Relations Bill, a provision tagged on to legislation designed principally to fundamentally reform the State’s existing employment rights and industrial relations structures, will soon be enacted to remedy Ireland’s failure to properly implement the Working Time Directive 2003/88. Such failure became evident in 2009 when the Court of Justice of the European Union (CJEU), in a combined decision in the Schulz-Hoff / Stringer cases, declared that under the Directive an employee accrues annual leave even during a sickness absence provided that sickness absence is certified. The CJEU further held that such leave must be taken within 15 months of the end of any given leave year. It was not, however, until after receipt in July 2014 of a Letter of Formal Notice from the European Commission, that a move was made to change the law in Ireland. The amending legislation (section 87), currently before Seanad Éireann, brings clarity to the situation. It provides that:- certified sickness absence shall be deemed to be time actually worked when calculating holiday entitlement. if the employee as a result of illness is unable to take all/part of his/her holiday entitlement during that leave year (or within 6 months of that leave year, if deferred with the employee’s agreement), the entitlement must be availed of within 15 months of the end of the leave year to which it relates; On the one hand this is an added expense for employers to bear. On the other, it caps the exposure as the entitlement lapses 15 months after the end of the leave year to which it relates. A statutory leave year under the 1997 Act is the 12 months running from 1st April. Pending enactment of the amending legislation, the Directive, which has direct effect on EU Member States, is binding on the Irish State, thereby benefiting state and public employees. Private sector employees must, however, await the enactment of section 87 of the Workplace Relations Bill before they can seek to enforce the same entitlement against their employers. Arguably private sector employees could claim against the State for losses arising from Ireland’s failure to properly implement the Directive. Employers may only pay in lieu of statutory (as opposed to contractual) holiday entitlement in the event of termination of the employment. Such payment would be at the normal rate of pay which generally means salary and usual contractual overtime, bonuses or commission (which, in the event of variation, would be averaged over the immediately preceding 13-week period). Employers who provide holiday entitlement over and above statutory entitlement may still by contract provide that such additional holiday is not accrued during sick leave, whether or not certified. Such employer may also contract that statutory sick leave is taken ahead of additional sick leave, thereby minimising potential exposure. At present, per the decision in Royal Liver –v- Macken (2002), a claim for statutory holiday entitlement under the 1997 Act must relate to the entitlement accrued during the 18-month period prior to the date of claim. It is likely that following the enactment of section 87, this 18-month restriction will not apply to claims for statutory holiday entitlement which accrued during sick leave. Using the logic applied in the Royal Liver case, an extended claim period of 27-months prior to the date of claim may, arguably, apply to statutory holiday entitlement which accrued during long-term sick leave. This would translate to a maximum payment/award of 9-weeks normal pay in lieu of holiday entitlement upon termination of that employment, whether that termination is instigated by the employer or the employee. The amending legislation while providing clarity to employers vis-a-vis their obligations towards their employees, may also cause those employers to be more pro-active in managing long-term/frequent sickness absence in an effort to avoid the cost of the associated holiday entitlement. In doing so, an employer must also take account of the prohibition against discrimination on the disability ground and the duty to reasonably accommodate such disability per the Employment Equality Acts 1998-2011. Copyright © McKeever Solicitors, 31st March 2015. This article is a general summary on the subject and is not intended to be a thorough review or a complete statement of the law. Specific legal advice should be sought on a case by case basis. For further information please contact Andrew Clarke or Ciara Meskell. https://www.mckr.ie/insights/news-and-publications/new-sick-leave-holiday-entitlement https://www.mckr.ie/insights/news-and-publications/new-sick-leave-holiday-entitlement Tue, 31 Mar 2015 01:00:00 +0100 www.mckr.ie Evolving Regulation of Payment Services Payment Services are a vital component in enabling the free movement of goods, services capital and persons in the EU. In an article published in Financier Worldwide, we look at the Evolving Regulation of Payment Services. Click to open pdf. © Paul Foley, McKeever Solicitors 5th March 2015 This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further information, please contact Paul Foley. https://www.mckr.ie/insights/news-and-publications/the-evolving-regulation-of-payment-services https://www.mckr.ie/insights/news-and-publications/the-evolving-regulation-of-payment-services Thu, 05 Mar 2015 00:00:00 +0000 www.mckr.ie The Companies Act 2014 The Act will commence 1st June 2015. It is generally pro business, deregulatory and will cut compliance costs in the long term. There will however be costs to companies to adopt their documentation to the new regime in the short term. Summary The Companies Act 2014 (the Act) will commence 1st of June 2015. The Act is generally pro business, is deregulatory (although does not go as far as the UK Companies Act 2006) will cut compliance costs in the long term, but there will be costs to companies to adopt their documentation to the new regime in the short term. In the case of private companies, the Act principally provides for a private company limited by shares (a CLS) and a designated activity company (DAC) ( such as a charity ). Directors of an existing private company, are under a duty prior to the expiry of the 18 month transition period to prepare a constitution for a CLS and deliver it to the members and to the Registrar for registration. If it does not do so, it automatically becomes a CLS. An existing private company may re register as a DAC by passing an ordinary resolution not later than 3 months before the expiry of the transition period resolving that the company be so registered as a DAC. An existing private company may be required to re-register as a DAC by members holding 25% or more of the voting rights. Where an existing private company does not, before the expiry of the transition period, re-register as a DAC (whether it is obliged under that section to do so or not), 15% or more of the members (by voting rights) or creditors holding 15% or more of the company’s debentures may apply to the court for an order directing that it shall re-register as such a company. Key Features 1. The Act provides a thorough framework for the incorporation, re-registration and supervisory framework under Irish company law for the following vehicles: A private limited company having a share capital (CLS). This is the form of vehicle used or that will be used by the vast majority of companies in Ireland. A designated activity company (DAC) is defined as a company to which Part 16 of the Act applies. This is a private company limited by shares or a company limited by guarantee, the primary defining feature of which is the continued existence of a restricted objects clause, in the constitution of the company (e.g. a special purpose vehicle or a restricted activity joint venture company or a charity). A company limited by guarantee (CLG) and not having a share capital. A public limited company (PLC). The typical vehicle used to raise money from the public. An Investment Company which is a form of PLC and typically a non UCITS company. Unregistered Companies and Joint Stock Companies as well as various forms of unlimited companies. There is a transitional period which the CRO has stated will be 18 months for private limited companies to consider whether to convert to CLS or DAC status. 2. CLS. A CLS will have a single document constitution, may have a single member and up to 149 members, may have a minimum of 1 director and may dispense with holding a physical AGM. 3. DAC. A DAC will be the nearest to the current private limited company (whether limited by shares or guarantee), with the requirement for a two document constitution (including an objects clause), two directors and a company secretary. Companies that may have to, or wish to convert to DAC status are typically Charities, Joint Venture Companies, Special Purpose Vehicles. 4. CLG. These are typically Charities, or Sports Club. A CLG cannot have a share capital. The constitution of a CLG shall be in the form of memorandum of association and articles of association which are together referred to as the constitution. The constitution of a CLG shall be in accordance with the form set out in the Act or as near thereto as circumstances permit. The Act also specifies how it will affect the memorandum and articles of an existing company limited by guarantee. It must be named as a company limited by guarantee or CLG (upper or lower case) or the Irish equivalent. The Act allows, subject to compliance with certain conditions, for the words ‘‘company limited by guarantee’’ to be dispensed with in the case of charities or other companies where all the profits of the company are applied to the promotion of that company’s objects (for example, the promotion of science, commerce, art, education or religion). The Act requires a CLG to have two directors. It also regulates the rotation of Directors unless the constitution provides otherwise. 5. Share capital. The Act allows a company to allot shares (a) of different nominal values (b) of different currencies ( c ) with different amounts payable of them or (d) with a combination of 2 or more of the foregoing characteristics. Shares may be issued with such preferred, deferred, or other special rights or restrictions, whether in regard to dividend, voting return of capital or otherwise as the company may decide by ordinary resolution. 6. Reductions in capital. Reductions in capital (as defined) may be effected through compliance with a new Summary Approval Procedure. 7. Share Premiums. The Act provides that when a CLS issues shares at a premium, the premium received forms part of the undenominated share capital. This is, in general terms, the amount of the company capital from time to time in excess of the nominal value of its issued shares. The premium received shall be transferred to the share premium account. There are some exceptions to this. In the context of a certain type of merger within s72, there is no obligation to set up a share premium account. There are also less onerous requirements in the case of a group reconstruction within s73 and a group reorganisation within s75. 8. Electronic Records, Meetings, Communications Records. In the case of any register, index or minute book required to be kept by a company, the Act allows for them to be kept otherwise than making entries in bound books. This includes power to keep the register or other record otherwise than in a legible form but subject to compliance with certain conditions. Electronic filing agent. A company may authorise a person (an electronic filing agent) to (a) electronically sign documents required or authorised to be delivered by the company to the Registrar and (b) deliver to the Registrar by electronic means those of documents to be signed. Delivery of documents in electronic form to the CRO, may be made mandatory, if the Minister, after consultation with the Registrar, requires that this be done and it is justified. Director meetings. A meeting of the directors may be held by conference call, video or other electronic communication. AGMs and EGMs may be held inside or outside the State: in the latter case where all members agree. Where they do so, there is a duty on the company to incur the cost of participation (by technological means) for the members without having to leave the State. Merger and Divisions. Where companies wish to merge, there is a new arrangements that allows for the provision by email to the shareholders (where they have so consented) of the copies of the merger documents. In the case of general meetings of companies involved in a division, the Act allows for the use of electronic means to make the division documents available to the shareholders. 9. Majority Written resolution. Following on from the UK, a very welcome majority written resolution procedure has been introduced. Certain conditions have to be satisfied. The procedure will be available for CLSs and DACs but not for PLCs or CLGs. The procedure is not available in respect of a resolution to remove a director or an auditor. The written resolution(s) must be delivered to the company otherwise they do not have effect until this is done. There is a 7 delay period in the case of special resolutions and 21 day delay period in the case of ordinary resolutions before they have effect, unless certain conditions are satisfied. 10. Financial Assistance. Unlike the UK, where the financial assistance rules have been done away with for private limited companies (subject to some exceptions), a prohibition on the giving by a company of financial assistance for the purchase of its shares is contained in significantly revised format in s82 of the Act. The Act provides for two general circumstances where the giving of financial assistance is not prohibited, firstly where the purpose in giving the assistance is not for the purpose of an acquisition (as defined) or secondly, where the giving of such assistance is merely incidental to some larger purpose of the CLS. Such assistance must be given in good faith and in the interests of the CLS. The section reproduces other exemptions from existing law. However it also introduces a new exemption which provides that financial assistance given in accordance with the new Summary Approval Procedure is permitted. 11. The Board of the Company. The Board of Directors and any registered person will be deemed under the constitution to have authority to exercise any power of the company and to authorize others to do so. Where the Board authorises any person to bind the company (subject to some exceptions) the company may notify the CRO in the prescribed form of the authorisation and the Registrar shall register the authorisation. 12. Power to Attorney. In a new provision, the Act allows a company to empower any person either generally or in respect of any specified matters as its attorney to execute any deed or do any matter on its behalf in any place whether inside or outside the state. 13.Directors’ Duties. As with the UK 2006 Act, director’s duties at common law and equity have been codified. 14. Shadow and De Facto Directors. In addition to a definition of a shadow director, there is now a statutory definition of a de facto director. 15. Directors’ Compliance Statement. A Director’s Compliance Statement will be required to be given for private companies over a certain size (as below) under s225 of the Act and will be required to be given by all PLCs. In general terms, if in respect of the financial year of the private company to which the report relates (a) its balance sheet total for the year exceeds €12,500,000; and (b) the amount of its turnover for the year exceeds €25,000,000, then subject to some exceptions and provisions for exemptions, it will be required to provide a directors compliance statement. 16. Dealings by the Company with Directors. Dealings with directors as set out in CA 1990 have been made much clearer in s239 et sequi and the Act incorporates new law. Generally companies are prohibited from giving direct or indirect loans or loan-type finance to directors or a person connected with a director, subject to certain exceptions. S242 is new and provides that section 239 does not prohibit a company from making a loan or quasi-loan, entering a credit transaction or entering into a guarantee or providing any security of the kind described in section 239(i) if the Summary Approval Procedure is followed. 17. Loans made by Directors to the company are now the subject of some regulation and should be properly drafted, set out in writing and executed by the parties. 18. Giving security by the company. With regard to the giving of security by a company, the 21 day rule has been maintained ( ie the charge or debenture must be received in the CRO within 21 days), but a two stage registration procedure for charges and debentures has been introduced (similar to that existing in some common law countries, which involves filing a notice of intention and then the charge within 21 days of the Registrar’s receipt of the notice of intention). 19. Financial Statements, Annual Return and Audit. The requirements are contained in Part 6 of the Act. Chapter 1 gives the power to the Minister to specify that US Accounting Standards may be used in certain limited cases for a transitional period. Chapter 3 introduces a new term and defines it ‘‘financial year’’ and requires that a company’s first financial year be within 18 months of its date of incorporation and thereafter should generally be for a period of 12 months or 52 weeks. This Chapter also incorporates the obligation to prepare entity and group financial statements in the form of Companies Act financial statements or under International Financial Reporting Standards (IFRS). 20. Audit Exemption. Chapter 15 of Part 6 of the Act deals with companies that qualify for an audit exemption identifies the companies that can avail of an audit exemption and those that cannot. In order to avail of the exemption, the company must be a small company and must not be a parent, subsidiary, credit insurance undertaking or an entity listed in Schedule 5 to the Act and must have filed its latest annual return in time. Chapter 16 provides for a special audit exemption for dormant companies subject to certain conditions. 21. Revision of Defective Statutory Financial Statements. Chapter 17 of Part 6 of the Act deals with the voluntary revision of defective statutory financial statements and is similar to requirements found in the UK Companies Act 2006. Prior to this, there was no mechanism in Irish company law whereby the directors, if they became aware of a deficiency in their latest statutory financial statements or directors’ report, could revise the reports filed with the Registrar. The Chapter sets out the procedures available to the directors to remedy deficiencies and where the company has a statutory auditor appointed, the statutory auditor is required to report on the revised financial statements and revised report. The Chapter also contains procedures for the revision of abridged financial statements filed by small and medium companies. 22. Reorganisations, Mergers and Divisions Part 9 and Part 17 (for PLCs) of the Act provides the framework for the reorganisation, acquisition, mergers and divisions of companies, parts of which are entirely new. In the case of Mergers for private companies, they can be effected either in accordance with the Summary Approval Procedure or, in the absence of the Summary Approval Procedure being employed, the relevant provisions of Part 9 of the Act. Accordingly, in the case of private companies under certain circumstances, a Merger may be effected without the need for a High Court order. It is also possible to proceed under Chapter 1 of Part 9 (Scheme of Arrangement) of the Act as an alternative. In the case of Divisions (Chapter 4), this is new law. The Divisions covered are division by acquisition and division by formation of new companies. Divisions can be effected also under Chapter 1 (Schemes of Arrangement) as an alternative where possible. 23. Part 23 of the Act provides a clear framework in the case of PLCs for the application of Irish requirements on Public Offers, Market Abuse, Corporate Governance Statements and Transparency. Part 23 of the Act also provides a framework for local offers which are defined as offers of securities to the public in the State for less than 5 million Euro. This is a separate category to those exempted or excluded from the Prospectus Directive. 24. Part 24 of the Act makes provision for investment companies with variable capital which are typically non UCITS investment companies. S1387 of the Act provides that the provisions of Parts 1 to 14 of the Act apply to an investment company save to the extent that they are (a) disapplied to public limited companies by section 1002; (b) disapplied by s1387(3) or modified by another provision of this Part. 20th February 2015 The Companies Act 2014: Key Features Copyright McKeever Rowan 2015 – All Rights Reserved By Paul Foley Partner McKeever Rowan 5 Harbourmaster Place International Financial Services Centre Dublin 1 Contacts in connection with the Article Non Contentious Paul Foley Partner Email: pfoley@mckr.ie Andrew Clarke Associate Email: aclarke@mckr.ie Contentious Gerard Walsh Partner Email: gwalsh@mckr.ie Liz MacGinley Associate Email: lmacginley@mckr.ie https://www.mckr.ie/insights/news-and-publications/the-companies-act-2014 https://www.mckr.ie/insights/news-and-publications/the-companies-act-2014 Fri, 20 Feb 2015 00:00:00 +0000 www.mckr.ie Radical Changes to Compensation Payments in Personal Injury Claims The law on personal injuries settlements is about to change radically with the introduction of the Social Welfare and Pensions Act 2013, on 1st August 2014. Until now compensation for loss of income has been reduced to account for the payment of certain social welfare benefits. From August 1st the defendant/insurers must refund certain welfare payments to the Department of Social Protection in advance of paying out compensation to claimants. The Injuries Board will also direct defendants how much they are due to repay to the State. Insurance companies will be required to apply for a statement of welfare payments, known as a Recoverable Benefits Certificate which will be supplied to the insurer within 28 days and it is then that the suitable payment must be refunded to the department. The Department of Social Protection will be entitled to a full refund as specified in the Certificate unless there is a court order saying otherwise. The Departments right to recover these payments is restricted to the following six categories; illness benefits, partial capacity benefits, injury benefits, incapacity supplements, invalidity pensions and disability allowances. In cases of contributory negligence the amount repayable to the Department of Social Protection will be reduced pro rata. The limitation period commences on the date on which the injured person first becomes entitled to a specified benefit as a result of the personal injury, and ends on the earliest of five years from that date or the date on which compensation is paid in final discharge of the claim. This new scheme will ensure that the state is not underwriting insurance companies. One of the most radical changes for personal injuries practitioners is that it will bring all-in settlements to an end. Prior to this insurers could pay claimants a single lump sum including compensation and costs. This brought finality to the claim rather than have a dispute over costs drag on. Post 1st August 2014, a settlement must specify and distinguish between general damages and special damages including loss of earnings or other heads of claim. Alice Ferris Orange, 23rd July 2014 For further information please contact Robert Browne © https://www.mckr.ie/insights/news-and-publications/radical-changes-to-compensation-payments-in-personal-injury-claims https://www.mckr.ie/insights/news-and-publications/radical-changes-to-compensation-payments-in-personal-injury-claims Wed, 23 Jul 2014 01:00:00 +0100 www.mckr.ie High Court Upholds Labour Court OWTA Determination The recent High Court judgment in the case of Piotr Bryszewski v Fitzpatricks and Hanleys Limited trading as Caterway 1 has important implications for employers and employees in Ireland. The judgment was delivered following the employee’s appeal from the Labour Court. The case involved a company involved in the wholesale supply of fruit and vegetables to the catering industry. The appellant is a Polish national who worked for the defendant company as a warehouse operative and relief van driver. The appellant originally brought a claim based on the arrangements for the taking of breaks throughout the working day as per section 12 and the employers requirement for the employee to work additional hours as per section 17 of the Organisation of Working Time Act, 1997(the “Act”). Section 12 outlines the minimum break periods for employees during the working day as being when an employee works for a period of more than 4 hours and 30 minutes they are permitted to a break of at least 15 minutes. It also states that ‘an employer shall not require an employee to work for a period of more than 6 hours without allowing him or her a break of at least 30 minutes’. Section 17 (2) outlines that if an employee is required to work any hours in excess of their contracted hours of work the employer must notify the employee as soon as is reasonably possible. The original claim brought before the Labour Relations Commission resulted in an award of €300 in compensation. On appeal the Labour Court found that there was no structure in place allowing access to designated breaks throughout the working day for employees. The respondent’s defence to this was that there were normally interruptions in work during which employees could take their breaks. Finding that this did not meet the requirements of section 12 of the Organisation of Working Time Act 1997 the Court awarded €600, which it believed was fair and equitable in the circumstances. The Labour Court stated that there was some element of non-compliance by the employer in relation to section 17 but it was minor and inconsequential. The appellant appealed this determination based on a point of law as set out at s. 28(1) of the Organisation of Working Time Act 1997. The Appellant was dissatisfied with the compensation awarded to him by the Labour Court claiming the amount was inadequate and didn’t follow the relevant precedent. The appellant argued that the principles of effectiveness, deterrence and proportionality as established in the European Court of Justice’s judgment in the case of Von Colson and Kamann v Land Nordrhein-Westfalen 2 were ignored and that the award was merely a nominal one. This was argued to be also contrary to the practice of the Labour Court and the law relating to minimum working time limits. The appellant also claimed a de minimis gloss 2 was wrongly applied in determining the compensation available. The Von Colson judgment requires sanctions to act as a real deterrent for employers. The compensation must be adequate for the damage sustained and more than nominal compensation. The Court also held that National Courts may interpret and apply the legislation adopted to conform with Community Law, as far as national law discretion allows. Considering the above judgment and a number of other relevant cases, Birmingham J found that the sum of €600 was not merely a nominal sum. He also found that the Labour Court was aptly capable of assessing how the alleged breaches should be categorised, and acknowledged it does so by using a scale. For this reason he believed Courts should be careful when dealing with specialist tribunal decisions such as that of the Labour Court. The Court was in agreement with the judgment in Ashford Castle Limited v Services Industrial Professional Technical Union 4 whereby the specialist expertise of the Labour Court was credited and found to be a superior standard than that of the High Court. Attention was also drawn to the judgment of Hamilton C.J. in Henry Denny and Sons (Ireland) Limited v Minister for Social Welfare 5 where the Court held that courts should be slow to interfere with the decisions of expert bodies. However, in this case Justice Birmingham stated that if the Court believed that the Labour Court was unaware of or ignoring the principles established in Von Colson then the High Court would readily intervene. The appellants attempt to rely on earlier precedence in which there were higher monetary awards failed. Attention was drawn to the case of Goode Concrete Limited v Karpauskas 6 in which there was no provision to take breaks within the working day. The Court held that there is a duty to provide breaks and it is a ‘fundamental social right in European Law’. However in the Piotr Bryszewski case the High Court felt that the facts of this case and a number of others differed and the awards had been proportionate to the level of the breaches. The argument regarding the de minimis gloss also failed. It was held to be ill-founded and of no substance as there was no evidence that the Court had a minimum level below which it would not involve itself. In summary, the High Court found that the Labour Court, as a specialist statutory body, was well-equipped to deal with claims relating to employer breaches etc. The High Court reaffirmed its reluctance to interfere with any determinations from these expert tribunals unless there has been a clear failure by the body to assess the damages correctly or an ignorance of the relevant precedent or principles. Therefore, the appeal failed. 1 [2013 No. 153 M.C.A.] 2 (Case C-14/83) [1984] E.C.R. 1891 3 Where the Court does not concern itself with what it considers small matters/trifles 4 [2006] IEHC 201 5 [1998] 1 I.R. 34 6 WTC/06/63, 22 February 2008 https://www.mckr.ie/insights/news-and-publications/employees-organisation-of-working-time-high-court-appeal-dismissed https://www.mckr.ie/insights/news-and-publications/employees-organisation-of-working-time-high-court-appeal-dismissed Thu, 17 Jul 2014 01:00:00 +0100 www.mckr.ie Engaging Persons with Employee Status versus Commercial Agents Companies establishing a subsidiary in Ireland or companies in a start-up situation naturally are concerned to minimise costs. They must decide whether it Is is more advantageous to engage employees from day one or engage persons as self-employed intermediaries. Companies establishing a subsidiary in Ireland or companies in a start-up situation naturally are concerned to minimise costs. They must decide whether it Is is more advantageous to engage employees from day one or engage persons as self-employed intermediaries. The decision has to be made as to whether they should engage employees from day one or whether it is more advantageous to engage persons as self-employed intermediaries, particularly in circumstances where products are being sold. I set out below points for consideration in coming to a decision whether to take on persons as employees or as commercial agents. Points For Employee More control over the persons as employees. A salary structure can be put in place with a basic salary and commission on work introduced but keeping outside the terms of the EU Directive on Commercial Agents. You can restrain the employee for a period from competing against you after he leaves your employment. The intellectual property in the employees customers’ sales list is yours and not the employees. As the employee would not be “a self-employed intermediary” the Commercial Agents EU Directive would not apply. Having employees may assist in establishing the tax status of your proposed company. Points Against The administration needed to administer the employees. The need to deduct tax PAYE (“Pay As You earn”), PRSI (“Pay Related Social Insurance”), USC (“Universal Social Charge”) etc. Duties to provide a safe environment for work. May create extra costs in employer’s insurance and expenses, although the expenses can be deducted before any commission paid as part of the employment contract. It can be difficult to terminate an employment contract unless there is good and sufficient reason although you can have a fixed term contract to avoid the provisions of the Unfair Dismissals Act. This can only be done up to a cumulative period of 4 years. You must pay at least the minimum wage of €8.65 per hour. You must comply with employer’s duties to employee, such as safe place of work as above, holidays, parental leave, maternity entitlements, proper instruction, written terms of employment, records to be kept etc. Advantages of Engaging Persons as Commercial Agent The Administration can be minimal. No deductions of tax PAYE, PRSI, USC etc. No necessary liability for the expenses incurred by the agent unless set out in the Contract. Only requirement to make payment when sales have been effected. Disadvantages of Engaging Persons as Commercial Agent The agent’s commercial list of his contacts and customers belongs to him. The commercial agent shall be entitled to commission and transactions concluded after the agency contract has terminated if the transaction is mainly attributable to the commercial agent’s efforts during the period covered by agency contract and if the transaction was entered into within a reasonable period after that contract has terminated or if the order of the third party customer reached the principal or the commercial agent before the agency contract terminated. A commercial agent shall be entitled to commission on transactions concluded during the period covered by the agency contract where the agent has an exclusive right to a specific geographical area or group of customers and where the transaction has been entered into with a customer from that area or group. The commission shall be paid not later than on the last day of the month following the quarter in which it became due. The commission shall become due at the latest when the third party customer has executed his part of the transaction or should have done so if the principal had executed his part of the transaction as he should have. An agency contract for a fixed period which continues to be performed by both parties after that period has expired shall be deemed to be converted into an agency contract for an indefinite period. Under Articles 17 and 18 of the EU Directive , where an agency contract is for an indefinite period, either party may terminate it by notice. A Commercial Agent after termination of the agency contract is entitled to be indemnified on the basis of damages he suffers as a result of the termination of his relations with the principal. Such compensation for damage shall also rise where the agency contract is terminated as a result of the commercial agent’s death. However the indemnity in compensation shall not be payable where the principal has terminated the agency contract because of the fault attributable to the Commercial Agent which would justify immediate termination of the agency contract under national law and where the agent has terminated the agency contact (unless such termination is justified by circumstances attributable to the principal or on grounds of age, infirmity or illness of the commercial agent in consequence of which he cannot reasonably be required to continue his activities). The parties may not derogate from Articles 17 and 18 dealing with compensation where the principal has terminated the agency contract. While it might be argued that the EU Directive does not apply in relation to software as the Directive refers to “goods”; in general, because there is inevitably some element of physical documents or products associated with software agreements they are viewed as likely to come within the meaning of goods as in the EU Directive. https://www.mckr.ie/insights/news-and-publications/engaging-persons-with-employee-status-versus-commercial-agents https://www.mckr.ie/insights/news-and-publications/engaging-persons-with-employee-status-versus-commercial-agents Wed, 06 Nov 2013 00:00:00 +0000 www.mckr.ie Distressed Asset Investment In Ireland The volume of assets being sold has risen significantly, the property supplements are filled with properties for sale together with the sale of businesses, their trade and goodwill and ‘voluntary’ sales of assets by borrowers beginning to occur at the direction/co-operation of lenders. The volume of assets being sold has risen significantly, the property supplements are filled with properties for sale together with the sale of businesses, their trade and goodwill and ‘voluntary’ sales of assets by borrowers beginning to occur at the direction/co-operation of lenders. Added into this, there has been the sale of certain books of loans by some financial institutions, the most significant of which being loans sold by NAMA worth collectively €22 billion. All of which has created a growing momentum of deal activity within a section of investors, ranging from domestic and overseas institutional investors, private equity firms, high net worth individuals and sovereign wealth funds. The previous sale by NAMA of an €800 million loan portfolio known as Prospect Aspen being a prime example of the scale of transactions taking place coupled with the commencement by IBRC’s Joint Special Liquidators of the sales process for Project Evergreen (Irish originated corporate loan book), Project Rock (UK commercial real estate loans), Project Sand (Irish residential mortgage loan book) and Project Stone (Irish originated commercial real estate loan book) in August. Assets not sold by the special liquidators at or above the internal independent valuations are to be transferred to the National Asset Management Agency. However, investors should note that the process is far from a ‘gold rush’ with growing competition for the available supply of prime assets and with complex legal, due diligence, tax and reputational/brand issues arising together with sales/bidding processes which can involve a certain amount of complexity and strict time limits associated with auction and tender sales. It must also be observed that Lenders have also had their share of ‘tyre kickers’ intent on sourcing prime assets at bargain prices without having carried out appropriate research. But what type of deal activity is occurring and what are the issues that arise? In dealing with distressed assets, investors need to be concerned about a greater range of issues than might arise in a regular transaction. More than ever the mantra of ‘caveat emptor’ applies. 1. Asset Sales: (a) Dealing with Receivers A mortgage commonly provides that the receiver is the agent of the borrower and the receiver sells the property on foot of the powers contained in the mortgage over the property. No different to purchasing an asset from an ordinary vendor, efforts need to be made to ascertain that correct title to the asset is held by the receiver to sell the asset in question. Is the receiver properly appointed and vested with power to sell the asset? The recent case concerning Foley’s Bar should be noted, where the receiver appointment by Bank of Scotland Plc was overturned due to the deed appointing the receiver not having been executed in accordance with its Memorandum & Articles of Association. What warranties and assurances are being provided by the receiver in relation to issues such as planning permission or where a commercial property has been developed, what is its VAT history? Typically, a receiver will hold very limited information on such issues and will not be prepared to offer any warranties as a result. This places a greater burden on an investor / purchaser and onerous/restrictive contracts issued by receivers have been the subject of recent correspondence from the Law Society to the Banks. Particularly, incomplete properties or imperfect titles can often be encountered, requiring detailed further investigations with properties frequently being offered for sale at auction or by tender creating a narrow window to identify, quantify and resolve problem issues. Investors need to be cognisant of properties being sold ‘warts and all’. Such issues can present financing issues with banks being cautious in terms of the security value of an asset and any implications any defects may have on the value of the security or realisability of the security. (b) Voluntary Sales by Borrowers Increasing numbers of properties are being placed on the market ‘voluntarily’ by borrowers. Issues can arise where a property is being ‘short sold’ i.e. below the value of the underlying loan, whether the Bank will furnish a full release of its charge. For obvious reasons this is something which a vendor will be anxious not to disclose for fear that it may prejudice the sale negotiations. However it can lead to delays whilst a lending institution decides whether to consent to a sale and this process can often cause frustrations on a purchasers side. In reality, lenders are often hesitant to confirm consent until the bidding process has concluded and the final terms agreed. Once a sale has been agreed each lender will have their own procedures to be complied with, by which it authorises a sale and deals with any shortfall remaining on the loan. In addition, purchasers would be well advised to conduct full searches against the vendor and property at pre-contract stage to alert themselves to any judgments or judgment mortgages which may be registered against the vendor or property. 2. Sale of Business as going concerns Once again, limited warranties will be an issue for purchasers and also issues such as monetary and time period caps, to warranty claims and indemnities. Investors will further be concerned as regards the prospect of recovering from a receiver or distressed borrower in the event of a warranty claim. ‘Pre pack’ transactions are becoming more common with Clerys and the Thomas Crosbie Holdings Limited being two recent reported examples. Issues arising in such transactions can include questions of prejudice to creditors due to limited marketing of the assets/businesses or the perceived lack of transparency in such transactions. Recently a challenge was brought by a creditor 1 to the Thomas Crosby Holdings Limited receivership alleging amongst other matters, breach of contract, procurement of a breach of contract, intentional interference with business and economic relations and conspiracy. Whilst the substantive case remains pending before the Courts, the Court at a recent preliminary hearing ordered that the creditor provide security for costs to a number of the defendants. The amount of money to be provided as security for costs was not determined but is likely to amount to a substantial sum (the legal costs of all defendants combined were estimated to be in the region of €3.2 million Euro). The magnitude of such orders is likely to concern already hard pressed creditors who may wish to challenge such processes. 3. Acquisition of Loan Portfolios / Distressed Debt With the commencement of the IBRC liquidation sale process, many investors and borrowers may be eying up bids for the loan portfolios or indeed the loans of certain borrowers which will be made available for sale on a standalone basis. The sales process which must be concluded by 31st December 2013 involves a notification and submission process (which is already underway) to borrowers and the disclosure of information pertinent to the loans to qualified bidders subject to confidentiality provisions. The Special Liquidators are in the process of determining the requirements in order to be eligible as a ‘qualified bidder’ and how the loans will be sold. Any purchaser would require to undertake detailed due diligence on the underlying loan book and loan documentation together with comprehensive tax advice to consider the most suitable vehicle to acquire the loan book and address issues such as double taxation treaties and withholding tax on interest payments arising on the loans. There are a number of investment strategies available for the acquisition of loan portfolios under the Irish Corporate and tax regime: (i) Acquisition by Special Purpose Companies under Section 110 of the Taxes Consolidation Act 1997; (ii) Acquisition by Regulated Fund Structures, whether they be UCITS / non UCITS or Qualifying Investor Fund (QIF); or (iii) Acquisition by Irish Incorporated Company. Specific tax advice should be taken at the outset to establish the correct corporate structure to suit the particular investment based on the requirements of each structure. For example a Section 110 SPC must hold qualifying assets (which includes shares, bonds or other securities; invoices, all types of receivables, obligations enduring debt including loans and deposits) to a minimum market value of €10 million; QIF’s are suited to transactions where underlying land comprising the security for the loan portfolio is to be acquired, as a Section 110 SPC cannot hold land directly; REITs could be a suitable vehicle where rental/investment property is intended to be acquired. Further transaction opportunities are likely for investors and purchasers as the market develops into late 2013 / early 2014 as the supply grows due to factors such as the Central Bank targets set for the Banks for resolution of loan arrears, the advancement of the IBRC liquidation and sales process, and the recent enactment in July of the Land and Conveyancing Law Reform Act 2013, as a solution to the Start Mortgages issues surrounding the granting of summary orders for possession, will lead to an increase in enforcement activity by lenders. McKeever Solicitors can provided added value advice on all aspects of investment in/sale of distressed assets and businesses by receivers, banks and purchasers/investors. 1 Webprint Concepts Limited v Thomas Crosbie Printers Limited, Thomas Crosbie Holdings Limited, Bontury Limited (trading as Landmark Media Investments), Allied Irish Banks plc, Kieran Wallace, Irish Times Limited, Thomas Patrick Crosbie and Alan Crosbie (2013) No 2662P/ (2013) No. 37 COM https://www.mckr.ie/insights/news-and-publications/distressed-asset-investment-in-ireland https://www.mckr.ie/insights/news-and-publications/distressed-asset-investment-in-ireland Mon, 30 Sep 2013 01:00:00 +0100 www.mckr.ie Defamation and Social Media The 2009 Act provides long awaited legislative reform to the Law of Defamation in Ireland, however it falls short in dealing with the issue of Defamation involving the internet, intermediary service providers and social media service providers. The 2009 Act provides long awaited legislative reform to the Law of Defamation in Ireland, however it falls short in dealing with the issue of Defamation involving the internet, intermediary service providers and social media service providers. The Law of Defamation in Ireland is governed by the Constitution, Common Law and the Defamation Act 2009. Whilst the 2009 Act provides long awaited legislative reform to the Law of Defamation in Ireland it falls short in dealing with the issue of Defamation involving the internet, intermediary service providers and social media service providers. The 2009 Act abolishes the distinction between libel and slander and provides for a one year limitation period for defamation actions. The Act also provides that a person has only one cause of action for multiple publications i.e. where the same defamatory statement is published to two or more persons. This is relevant in respect of the defamatory publication of statements on the internet with the potential of a worldwide audience. Cases of internet defamation often give raise to a situation where there is an inability on the part of the defamed party to identify the author of the defamatory statement. In these situations the wronged party looks to have the ISP or the Social Media Service Provider liable. Section 27 of the Act provides ISP’s with the defence of innocent publication. Pursuant to Section 27 the provider has a defence to an action for defamation where it can prove that it was not the author, editor or publisher of the statement to which the action relates. However reasonable care must have been taken in respect of the publication and it must be shown by the provider that it did not know and had no reason to believe that it caused or contributed to the publication of the statement giving raise to the defamation action. Regulation 16 to 18 of the European Ecommerce Directive (2003/31/EC) may also be relied upon. The directive provides that ISP who were mere conduits will escape liability if they did not initiate, select or modify the information contained in the transmission and did not select the receiver of the transmission. Some recent high profile cases in both Ireland and the UK have provoked a debate on the right to privacy, the right of the press to fairly and accurately report court proceedings and circumstances where an internet service provider can be held liable for defamatory content published online In the UK a recent Court of Appeal case “Payam Tamiz –v- Google Inc” Google sought to rely on the UK equivalent of Section 27 of the Irish Act and the EU Electronic Commerce Directive. The Court of Appeal held that where defamatory publications were allowed to remain on a blog after the SP had been notified of the defamatory nature of the publication it may be responsible for the continued presence of the material and thereby become a publisher. Five weeks were found by the Court to be sufficiently long for an inference to be drawn that Google was a publisher of the defamatory comments. It also concluded that Google might not be permitted to rely on the defence of innocent publication as it did not satisfy the test that it “did not know and had no reason to believe” that it contributed to the publication of a defamatory statement. In an Irish case Eoin Keogh –v- John Doe & Others, Peart J. Ordered the removal from U Tube, footage wrongfully accusing the Plaintiff of running away from a taxi without paying. He also allowed the other Defendants one month to permanently remove the internet clip. The Plaintiff also sought and was granted an Norwich Pharmacal Order identifying the identity of the users that had defamed him. The Plaintiff further sought an Order restraining the media from reporting the proceedings in anyway which identified the Plaintiff and defamed him by repeating the material in question. Judge Peart held that he must refuse the application as he found that the media were and are entitled to name the Plaintiff in the reporting of their proceedings and there was no basis on which the Plaintiff was entitled to declaratory relief that the newspaper in question had breached the terms of the injunction granted against the other Defendants. Whilst the 2009 Act falls disappointingly short in dealing with defamation in a world of continuous technological innovation, it is clear that the Courts when dealing with cases of online defamatory publication will strictly interrupt any defence provided for under the Defamation Act and will oblige the ISP’s to remove any defamatory material once they are on notice. Any delay on the part of the ISP to remove the defamatory content once on notice of it could lead the Court to hold that the service provider is responsible as publisher for the defamatory material. Copyright © Nicola Sweeney, McKeever Solicitors, 31st March 2015. This article is a general summary on the subject and is not intended to be a thorough review or a complete statement of the law. Specific legal advice should be sought on a case by case basis. For further information please contact Nicola Sweeney. https://www.mckr.ie/insights/news-and-publications/defamation-and-social-media https://www.mckr.ie/insights/news-and-publications/defamation-and-social-media Fri, 02 Aug 2013 01:00:00 +0100 www.mckr.ie Pilot Approach to Co-Ordinated Resolution of Multiple Debts The Central Bank have established a pilot programme for borrowers with multiple distressed debts to engage with their lenders in an effort to enhance co-operation between lenders of secured and unsecured debt and fairly resolve distressed debt for borrowers. The Central Bank have established a pilot programme for borrowers with multiple distressed debts to engage with their lenders in an effort to enhance co-operation between lenders of secured and unsecured debt and fairly resolve distressed debt for borrowers. The process is to be operated by a third party service provider who will seek completion of Standard Financial Statements from the borrower, assess their veracity and develop a treatment option by reference to what is termed “the Restructuring Waterfall” set out in the framework. Once the treatment option is provided by the service provider to the participating lenders, the lenders will have 48 hours to either seek additional information which would be relevant/require the proposal to be re-assessed, OR object to the proposal. Lenders are prohibited from unduly opposing a reasonable restructure having regard to the borrowers underlying circumstances and must act in good faith at all stages of the process. The purpose of the framework is to address the situation of borrowers experiencing financial difficulties but who are not insolvent and will not be eligible to avail of the new insolvency regime. In order to be eligible for the framework to be applied, a borrower must: Be co-operating as defined in the Code of Conduct on Mortgage Arrears (“CCMA”) with his mortgage lender. Must have taken steps to adjust his/her expenditure to establish norms. Must give consent to a third party independent service provider to liaise with all Lenders. The Framework will only apply to borrowers experiencing significant financial difficulty with regard to the payment of the mortgage on his/her principle private residence and other unsecured debt. Borrowers will continue to be covered by the protections of the CCMA for mortgage debt and the CPC for unsecured debt. The framework will not apply in the case of buy to let properties, business related debts or borrowers who are not co-operating as defined within the CCMA. The framework is designed to produce fair reasonable consistent outcomes for dealing with the secured and unsecured debt, will seek to form arrangements where borrowers can remain in their homes (where appropriate to their means and needs) and will provide for the extension of the terms of loans through term extension and interest rate reduction, reflecting individual circumstances of each borrower based on affordability and sustainability. The Restructuring Waterfall operates by setting out a sliding scale of remedial options ranging from: Assessment of affordability and determination that the borrower’s debts are affordable leading to a requirement for full repayment of all loans. Short term moratoriums or reduced repayment arrangements where the affordability shortfall is anticipated to exist for six months or less. Overdraft or credit card (“Demand Credit Debt) repayments to be extended to 5 year terms and a standardised interest rate of 9%. Extension of unsecured debt term up to 5 years and combination of Demand Credit Debt to a 5 year term and standardised interest rate of 9%, extension of unsecured debt AND Demand Credit Debt up to a 5 year term AND extension of mortgage debt to a maximum maturity of 65 years of age (full principle repayment expected in this scenario). Extension of unsecured debt and Demand Credit Debt up to a 5 year term and a standardised interest rate of 4.5% AND mortgage debt extended to a maximum maturity of 65 years of age AND unsecured debt interest rate reduced to 4.5% (full principle repayment expected in this scenario). Unsecured debt and Demand Credit Debt extended up to a 5 year term at a standardised interest rate of 4.5%, an extension of mortgage debt term to a maximum maturity of 65 years of age AND unsecured debt interest rate reduced to 4.5% AND mortgage debt interest rate reduced to 4.5% or tracker rate (if applicable) for a period of 5 years (full principle repayment expected in this scenario). Significant mortgage restructure including split mortgage, negative equity trade down and other solutions. PIA bankruptcy or repossession. Mortgage restructure is deemed to be the last resort before personal insolvency bankruptcy or repossession and after all other modifications or options have been exhausted. The operation of the pilot framework will be familiar to Banks given the similarities to the framework involved in the Code of Conduct on Mortgage Arrears. Subject to confirmation of the lenders participating the framework, it is likely that although termed a pilot approach and subject to review by the Central Bank after a period of 3 months in operation, the framework is likely to provide a reference point for borrowers and lending institutions in terms of dealing with borrowers with secured and unsecured debt alongside the Code of Conduct on Mortgage Arrears. https://www.mckr.ie/insights/news-and-publications/pilot-approach-to-co-ordinated-resolution-of-multiple-debts https://www.mckr.ie/insights/news-and-publications/pilot-approach-to-co-ordinated-resolution-of-multiple-debts Thu, 09 May 2013 01:00:00 +0100 www.mckr.ie Real Estate Investment Trusts (REITS) REITS are listed companies (quoted on a recognised exchange), holding rental investment properties. They have diverse ownership with no group controlling the entire REIT. The company is generally required to distribute at least 90% of profits to investors. REITS are listed companies (quoted on a recognised exchange), holding rental investment properties. They have diverse ownership with no group controlling the entire REIT. The company is generally required to distribute at least 90% of profits to investors. A REIT eliminates the double layer of taxation which typically hinders the holding of property through a company, with the REIT being exempt from Corporation Tax and the investor being required to pay Income Tax on the distributions to him. There are usually limits on borrowing to protect the income stream to investors by ensuring that income is not wholly allocated to debt repayments. For small investors, the entry cost is the price of a single share. Small investors can therefore participate in the property market without mortgage borrowings or property transfer costs. The Irish Finance Bill 2013, s39 provides for the introduction of a tax regime for REITS. Subject to meeting a number of criteria, including a requirement to distribute 85% of its property income by way of property income dividend, the regime provides for a tax exemption in respect of the income and chargeable gains of a property rental business. The REIT must derive 75 per cent of its aggregate income from the property rental business. It may carry on other “residential” business but the tax exemption applies only to the income and chargeable gains of the property rental business. The section also provides that property income dividends paid by the REIT will be subject to dividend withholding tax and will be taxable in the hands of the shareholders. © Paul Foley, McKeever Solicitors 28th February 2013 This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further information, please contact Paul Foley. https://www.mckr.ie/insights/news-and-publications/real-estate-investment-trusts https://www.mckr.ie/insights/news-and-publications/real-estate-investment-trusts Thu, 28 Feb 2013 00:00:00 +0000 www.mckr.ie Bankrupt Beneficiaries A personal representative of an Estate should be wary of paying out legacies to persons whom they know or believe to have been made bankrupt. The Official Assignee in Bankruptcy is appointed over all of the property of the bankrupt and therefore such property vests automatically in the Assignee under section 44 of the Bankruptcy Act 1988. This includes the right to assets in an estate on the date of the bankruptcy order even if has not yet been distributed. A personal representative of an Estate should be wary of paying out legacies to persons whom they know or believe to have been made bankrupt. The Official Assignee in Bankruptcy is appointed over all of the property of the bankrupt and therefore such property vests automatically in the Assignee under section 44 of the Bankruptcy Act 1988. This includes the right to assets in an estate on the date of the bankruptcy order even if has not yet been distributed. If a personal representative pays the legacy to the undischarged bankrupt rather than the Assignee they will not receive a good receipt for the legacy as the assets are put beyond the reach of the Assignee. The personal representative may be held personally liable for their actions by the Assignee or the creditors if they cannot recover the legacy from the bankrupt. However a personal representative acting in good faith for value without notice of the bankruptcy is protected as are their successors in title. It is recommended that a bankruptcy search is carried out against the beneficiary to ascertain his/her status at the commencement of administration and at the time that the estate distribution is being made. A bankrupt is required to disclose the full nature and extent of any property acquired after he is adjudicated bankrupt to the Assignee and failure to notify the Assignor is a criminal offence. If the bankrupt becomes a beneficiary of an estate after the date of the Bankruptcy Order, the interest vests in the first instance in the bankrupt. However the Assignee may elect to claim the after acquired asset under the 1988 Act. The Assignor will claim the asset if it can be realised for the general benefit of the creditors. The Assigner has 12 months to claim the property once he is made aware of it. We would recommend that a personal representative obtain confirmation that the bankrupt has notified the Assignee of his legacy in these circumstances. This may also be relevant for the forthcoming Personal Insolvency Act where similar steps should be taken before any distribution is made. In cases where a beneficiary is based outside of Ireland a personal representative must seek legal advice from a lawyer qualified in the jurisdiction where the beneficiary resides or conducts his/her business. Under the European Insolvency Regulation foreign bankruptcies and judgments may be recognised in other EU Member States. Therefore it is recommended that a testator, who is aware that a beneficiary has been or may be made a bankrupt, reviews their will and takes legal advice on estate planning. The testator may wish to amend their will temporarily for the period of bankruptcy or they may wish to set up a trust to avoid their wealth discharging a beneficiary’s debts. Using a well drafted discretionary trust will allow the trustees of the estate to control the distribution of the assets and protect the assets from third party claims. In order to provide effective asset protection the trust should provide sufficient powers to trustees to adjust to changing circumstances of the beneficiaries and be flexible enough to enable distribution to a beneficiary who emerges from his financial difficulties if the testator so wishes. This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For more information please contact Helen Sweeney. https://www.mckr.ie/insights/news-and-publications/bankrupt-beneficiaries https://www.mckr.ie/insights/news-and-publications/bankrupt-beneficiaries Fri, 01 Feb 2013 00:00:00 +0000 www.mckr.ie Charges by Overseas Companies Removing the requirement for an overseas company that has registered a UK Establishment with the UK registrar of companies to register at Companies House certain charges it creates over UK property. Removing the requirement for an overseas company that has registered a UK Establishment with the UK registrar of companies to register at Companies House certain charges it creates over UK property. Overseas companies within one month of the opening of a UK establishment, are required to make certain filings with Companies House. Furthermore, overseas companies if they granted certain types of charges over UK assets, were required to register the charge within 21 days at Companies House. As a deregulatory move, the UK government in September 2011, published the Overseas Companies (Execution of Documents and Registration of Charges) (Amendment) Regulations 2011 (2011 Regulations). The 2011 Regulations amend the Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009 (the 2009 Regulations) and make two important changes to the regime governing charges created by an overseas company. The 2011 Regulations: Remove the requirement for an overseas company that has registered a UK Establishment with the UK registrar of companies to register at Companies House certain charges it creates over UK property. Instead require such an overseas company to keep available for inspection at its UK Establishment a register of charges in which it must enter (within 21 days of the creation of such a charge) in it: any charge on land situate in the United Kingdom or any interest in such land; any charge on ships, aircraft and intellectual property registered in the UK; and any floating charge on the whole or part of the company’s property or undertaking situated in the United Kingdom The entry in the register in each case must give a short description of the property charged, the amount of the charge and except in the case of securities to bearer, the names of the persons entitled to it. Additionally, the overseas company must keep available for inspection a copy of every instrument creating a charge to which the 2011 Regulations apply. Failure to maintain such a register amounts to an offence, punishable by fine. The 2009 Regulations still apply for charges created up to and including 30 September 2011 (which will still be registrable and, if submitted outside of the 21 day filing period, will require an order of court) and they will also continue to apply for satisfactions. A company to which the 2011 Regulations apply, is required to make the documents and the register available for inspection, provided at least 10 working days notice is given. Where the company and the person agree, the 2011 Regulations provide that the inspection referred to, may be carried out by electronic means. However, it is important to note, that refusal to allow a required inspection, constitutes an offence punishable by fine. Copyright © Robert F. Browne, McKeever Solicitors, 5th December 2011. This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further information, please contact Robert Browne. https://www.mckr.ie/insights/news-and-publications/charges-by-overseas-companies https://www.mckr.ie/insights/news-and-publications/charges-by-overseas-companies Mon, 05 Dec 2011 00:00:00 +0000 www.mckr.ie