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Bad Banks & Bad Language

Despite the incompetence (to be temporarily mealy-mouthed) of The Irish Financial Regulatory Authority (the Central Bank of Ireland trading under a pseudonym) the ugly truth just may leak out, despite the best efforts of Brian Lenihan and Brian Cowen to prevent it from doing so.

It is not credible that they do not know what is to be known.

We have to wait for the thumb screws to be applied to the Directors and executives of Anglo Irish Bank; only then will we hear what they know. What they know are the names of the other conspirators.

Unfortunately this will take some time; more time if the process is delayed or obstructed.

Meanwhile the other conspirators will be fully at large to do further damage to Ireland, its people and its future.

Brian Cowen is one of those people who feel the weakness of “rejecting” something; he wants to claim he has “refuted” it, which he has not.

Asserting otherwise is an expression of contempt for the Irish public.

Taxis

Taxis are good things. As they carry speakers to public debates, for instance, they provide, because of the lack of distraction by traffic, the possibility of reviewing what is to be publicly said.

OK, that’s too sweeping a statement and applies to a limited number of occasions; say, debates on whether God exists or not.

It will not apply to debates on the legitimacy of tight time limits on applications for Judicial Review under Order 84 of the Rules of the Superior Courts, because there are no such debates.

The reliable Law Reform Commission published a paper examining the procedures relating to “ordinary’ Judicial Review and “statutory” Judicial Review, which can be seen HERE.

An examination of procedures, usually, assumes legitimacy.

Of course, there probably are some debates somewhere, but they are not public. My guess is that they take place in Dublin 4 or, possibly, at the top of Henrietta St., in Dublin 7.

The truth is, Judicial Review is a contraption. It’s cobbled together, dictated by circumstances and dubiously cast in the form of a general law.

See HERE for a previous reference by this writer to Irish Judicial Review.

Now, the legal jungle drums tell me that the State itself is aggrieved by the tight time limits in Order 84.

Judgment is awaited in a case where the State itself is seeking Judicial Review of a decision, time having run under Order 84.

A la W. B. Yeats, “And what rough beast, its hour come round at last, slouches towards Bethlehem to be born?”

(The title here is contrived; I am simply seizing on a chance to use the plural of “taxi” and show that there is such a word and such a spelling. Too often people believe, and act accordingly, that the plural of taxi is taxi’s.)

What’s the news?

We surely want to know the outcome of the case referred to HERE.

However, we’re very busy attending CPD courses and the like and we can easily miss the delivery of judgment. In any event, there is a tendency for judges to notify the members of the bar of impending judgment and to ignore the solicitors (and of course, the litigants).

The answer is Twitter.

See HERE for the uses of Twitter. Every judge can now have his/her “followers” and indeed, may use Twitter to sample opinion with a view to staying onside any any particularly thorny legal question.

Think how handy it would be to know that the legal profession are sanguine with the proposal to remove the reference to God from the Constitution!

The uses are endless.

Planning Enforcement

Under Section 154 of the Planning and Development Act 2000 a planning authority may issue an enforcement notice on an owner or occupier of land in relation to any development.

The matters to be specified in the notice are set out in Section 154. Suffice to say that, pursuant to Section 154 (8), failure to comply with the notice is a criminal offence.

This is very strange.

Firstly, the Planning and Development Act 2000 places no express obligation on the prosecution to prove that the “development” is unauthorised. Development, whether of use or of works, is not unauthorised unless it post-dates 1st October 1964.

Secondly, the Planning and Development Act 2000 makes no express provision for some obvious defences to any requirement that might be made in a notice, such as;

that the “development” is authorised;

that the “development” is not unauthorised;

that the “development” is exempted development:

In short, the offence seems not to be related to planning (sustainable or otherwise), just a failure to follow what may be a caprice of a planning authority official.

If that is true, it raises constitutional issues in any prosecution under Section 154 (8).

“Seems”, in this context is important. It is not inevitable that the offence actually constitute a failure to comply with a notice simpliciter.

The District Court (the offence is triable summarily) is at liberty to interpret the the Section and the evidential burden on the prosecution to avoid working a breach of the constitution. Under the European Convention on Human Rights Act 2003, there is an obligation on Irish courts to interpret legislation to avoid breaches of the European Convention on Human Rights (in this particular instance Article 6 thereof). It is regularly asserted that the Irish constitution already embodies standards equal to if not greater than the European Convention on Human Rights. A prosecution under Section 154 (8) is the ideal occasion to show that this is true.

Quarries

In Ireland, a special regime has been provided for quarries under section 261 of the Planning and Development Act 2000.

The section requires that information on a quarry be registered with the relevant local authority. The deadline for registering the information was 28th April 2005.

Section 261 10 (a) provides;

A quarry to which this section applies in respect of which the owner or operator fails to provide information in relation to the operations of the quarry in accordance with subsection (1) or in accordance with a requirement under subsection (3) shall be unauthorised development.”

The operation of a quarry clearly falls within the definition of “development”.

In this Act, “development” means, except where the context otherwise requires, the carrying out of any works on, in, over or under land or the making of any material change in the use of any structures or other land.”

Under Section 32 of the Planning and Development Act 2000 there is an obligation to obtain a planning permission for development.

32.—(1) Subject to the other provisions of this Act, permission shall be required under this Part—

(a) in respect of any development of land, not being exempted development, and

(b) in the case of development which is unauthorised, for the retention of that unauthorised development.

(2) A person shall not carry out any development in respect of which permission is required by subsection (1), except under and in accordance with a permission granted under this Part.”

Taken with the definition of “unauthorised use”:-

“unauthorised use” means, in relation to land, use commenced on or after 1 October 1964, being a use which is a material change in use of any structure or other land and being development other than—

(a) exempted development (within the meaning of section 4 of the Act of 1963 or section 4 of this Act), or

(b) development which is the subject of a permission granted under Part IV of the Act of 1963 or under section 34 of this Act, being a permission which has not been revoked, and which is carried out in compliance with that permission or any condition to which that permission is subject;”

a quarry requires to have a planning permission or established pre-1964 use AND be “registered” under Section 261 before 28th April 2005.

(Quarries are not “registered” under Section 261; the required information furnished to the local authority is entered on the relevant register.)

There is a canard abroad that “registration” of a quarry has the effect of making it lawful in the way the grant of a planning permission would. This, by definition, is wrong.

Quarries, no less than any other development, are subject to control by application to the High Court under Section 160 of the Planning and Development Act 2000.

Any person may make the application for an injunction under that section.

Contract Law (2)

Supposedly, a new era has dawned in Ireland for standard contracts in the public sector. See one new Construction contract HERE and another HERE.

The major change in these contracts is the shifting of risk from the public authority to the contractor. In general, these forms are intended to bring certainty and security to the State; whether they do so for the contractor is another matter.

That aside, these forms indicate an essential for all contracts; the formation and expression of agreement through offer and acceptance. Either side can make an offer which may be accepted by the other side. (Public servants are not free to accept offers which effectively vary the standard public authority terms but private persons, in their contracts, are completely free to do so). An offer which is met by a counter offer is declined, or not accepted.

Offers, and, by the same token, contracts, may be oral or written. It is common that they are both; the oral element may refer to substantial written terms as in “… I accept those terms”.

When the contract is complex (construction contracts are complex) the offer and the acceptance must refer to all the essential terms, and often all the terms, essential or not; otherwise there is no agreement.

For lawyers there are interesting rules about the time of the making of a contract. They relate to the receipt of offer and the receipt of acceptance. If a party tries to withdraw an offer it will be unable to do so after acceptance is communicated. (To withdraw the “offer” at that point is to breach the new agreement). Sometimes, due to delays in communications, a legitimate withdrawal of an offer (no acceptance having been communicated) becomes ineffective if the acceptance is delivered before your withdrawal is delivered.

Sam Goldwyn (of Metro-Goldwyn-Mayer, the US film producers) said of oral contracts, that they were not worth the paper they were written on. He was right, because of the lack of certainty they embody. Inevitably the two interlocutors making the “oral contract” will have differing recollections of the terms agreed. Litigation on such a contract is an unpredictable gamble.

Communication of offer and acceptance (ignoring EU regulation on the issue) can determine the place of the making of a contract. The place of the making of a contract (ignoring EU regulation on the issue) will determine the applicable law of the contract.

Contract Law (1)

It is a surprising fact that most contracts are concluded without reference to lawyers. It is surprising because of the extent of the law of contract and the effect of getting something wrong in the conclusion of the contract.

Contract law is an essential element of the world of commerce. Buying and selling things is what contract law is about. So, too, is the provision of services.

Most contracts are for small items and small sums; our transactions as we buy our groceries are typical. We do not expect to have to enter written contracts for these items, and we don’t. Nevertheless, these sales are subject to ascertainable conditions and terms, nowadays often emanating from the European Parliament.

If the Government decides to build substantial roadways across the landscape it will, of necessity, enter a contract, or contracts, to achieve that objective; the alternative would be to establish a national workforce in the employment of the State to directly build the roadways. We don’t do that.

Signing a contract for a new roadway (or a new building) is a significant matter. The contract will have to provide for a great number of things, not least the specification for the type or quality of road or building.

A lawyer should not be far removed from this occasion. After all, who drafted the contract? It should have been a lawyer. What if the written terms contain an ambiguity? There is a standard method, or rule, for dealing with that; the contract is interpreted against the person who drafted it.

There is another practical approach; use a standard form of contract. The benefits of such a form are enormous. Any ambiguities will have been eliminated, and the experience of predecessors will have been built into the contract with clauses providing for all the issues and matters that need to be addressed or provided for.

However, these large contracts will often have special conditions to be inserted into them; the facts will require it. It is a general rule that special conditions override general conditions where there is a conflict between them. In that case there is an unavoidable need for a lawyer.

In the construction industry many contracts commence as a consequence of the conclusion of the main contract. The contractor will, of necessity, have to source the skills required to do some of the work, possibly most of it, from specialist sub-contractors. Because of the time consumed in finding the sub-contractors, there may be exchanges of letters of intent or such like. Astonishingly, the result may be that there is no contract between the contractor and the sub-contractor. If the sub-contractor does work in such circumstances, it will still be entitled to be paid. The claim will be in quasi-contract on a “quantum meruit” basis. The work will be valued at market rates and a profit element will then be added. That is what the sub-contractor will be entitled to.

For the contractor, this may be a severe blow. Claims of delay, if any, (there will be such) and consequential, loss will not be enforceable by the contractor.

Anglo Irish Bank Corporation (3)

Comment on the situation at Anglo Irish Bank is, if it is fair, privileged. The matter is one of public interest.

This means it is open to people to speak about the situation freely without worrying that they might be the subject of legal proceedings for defamation.

See an early post HERE dealing with, inter alia, FAIR COMMENT.

Anglo Irish Bank Corporation (2)

There is a complete desert of information on the issue of the auditing of Anglo Irish Bank by Ernst & Young.

The first pertinent question to ask is, who were the accountants, as opposed to the auditors? Were Ernst & Young also the accountants?

The standard of care for an auditor is, almost invariably, that of the reasonably careful member of his profession. In short, just like a medical practitioner, the auditor is judged by the standards of practice among his peers.

There is a difference; the procedures to be followed by auditors are, in a sense, codified in accounting standards. Even where an accounting standard is not to be observed as a legal requirement, a failure to follow it is strong evidence of negligence. A court will not require proof by evidence of an expert on such a matter, just proof of the facts. Of course the plaintiff will still have to prove the loss flowed from the breach.

An auditor is entitled to rely on the internal controls in a company, particularly a large one. This is the reason why the identity of the accountant is important; if the internal controls were deficient Ernst & Young would have difficulty in relying on them if they established them or failed to implement them.

An auditor is entitled to rely on the assurances from management about the accounts. Nevertheless, an audit has to be planned and the plan has to take into account that the assurances from the management may be false. Therefore the auditor should consider where and how corroboration of information can be obtained.

In the case of Anglo Irish Bank, if IFSRA knew of the large Fitzpatrick loans for years, why did Ernst & Young not know of them? We know for sure that the loans were not reflected in the annual accounts and the accounts are required by law to show a true and fair picture of the state of the company’s accounts; that is precisely the averment required of an auditor in signing off on the accounts.

So, did Ernst & Young know of the loans and if they did not, why did they not? What added information did IFSRA have that Ernst & Young did not have?

Or, if IFSRA got the information, why did Ernst & Young not look to IFSRA on a regular basis to cross check what IFSRA knew with what Ernst & Young believed to be the case?

Dud Motor Cars

Most people who buy a motor car conform to the definition of “consumer” in the Sale of Goods and Supply of Services Act 1980.

3.—(1) In the Act of 1893 and this Act, a party to a contract is said to deal as consumer in relation to another party if—

( a ) he neither makes the contract in the course of a business nor holds himself out as doing so, and

( b ) the other party does make the contract in the course of a business, and

( c ) the goods or services supplied under or in pursuance of the contract are of a type ordinarily supplied for private use or consumption.”

A large number of those consumers buy their car on “Hire Purchase” or “Credit Finance”from a Finance Company.

Provision is made in the Consumer Credit Act 1995 for such purchases.

By Section 76 (2) of the Consumer Credit Act 1995, the following are terms of hire purchase agreements with consumers:

a. That the goods are of merchantable quality;

b. That the goods are reasonably fit for the purpose for which the consumer required them, (In the case of a motor car, to provide reliable, durable, defect-free motoriing to the consumer);

c. That the goods should be of satisfactory quality;

Section 76 reads in part:

(2) Where the owner lets goods under a hire-purchase agreement in the course of a business, there is an implied condition that the goods are of merchantable quality within the meaning of section 14 (3) of the Sale of Goods Act, 1893, except that there shall be no such condition—

( a ) as regards defects specifically drawn to the hirer’s attention before the agreement is made, or

( b ) if the hirer examines the goods before the agreement is made, as regards defects which that examination ought to have revealed.

(3) Where the owner lets goods under a hire-purchase agreement in the course of a business and the hirer, expressly or by implication, makes known to the owner or the person by whom any antecedent negotiations are conducted, any particular purpose for which the goods are being hired, there shall be an implied condition that the goods supplied under the agreement are reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied, except where the circumstances show that the hirer does not rely, or that it is unreasonable for him to rely, on the skill or judgment of the owner or that person.

(4) An implied condition or warranty as to quality or fitness for a particular purpose may be annexed to a hire-purchase agreement by usage.”

By Section 80 of the Consumer Credit Act 1995 representations made by the salesman selling the car are deemed to be representations made by or on behalf of the Finance Company.

Section 80 reads:

80.—Where goods are let under a hire-purchase agreement to a hirer, the person, if any, by whom the antecedent negotiations were conducted shall be deemed to be a party to the agreement and that person and the owner shall, jointly and severally, be answerable to the hirer for breach of the agreement and for any misrepresentations made by that person with respect to the goods in the course of the antecedent negotiations.”

No provision has been made under the Consumer Credit Act 1995 for the determination of disputes under the Finance agreement to be by Arbitration, whereas the standard Society of Irish Motor Industry (“SIMI”) form of agreement does contain an arbitration clause.

Consequently, disputes under Credit Finance Agreements are, in principle, resolvable in litigation. The consumer is not obliged to go to arbitration.

The consumer has a choice of suing the Finance Company and the motor dealer who “sold” the car to the consumer or just the Finance Company.

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