Categories
Property Law

Beware of the Representations Made to You in the Lead Up to Signing a Property Contract

Are you thinking about buying a property? Or a business?

If you are, you need to be cautious and vigilant about the statements you are tempted to rely on, and who is making those statements.

Let me explain.

I act for large numbers of people who are buying (or selling) property. When I meet the purchasers or speak to them on the phone they frequently tell me “the auctioneer said” or “the developer said” or “the seller said”.

I have to tell them to ignore, or at the very least treat with a great deal of caution, these statements because from a legal perspective they cannot rely on them. Because invariably when the auctioneer’s sales advice note issues or when the contract is issued by the vendor’s solicitor there will be disclaimers and conditions along the lines that the purchaser cannot rely on any statement outside of the written contract of sale.

And that the contract contains the entire agreement between the purchaser and vendor.

In other words, the vendor’s solicitor will go to the trouble in many cases of inserting a special condition similar to the following:

Entire Agreement and Representations

  1. The purchasers agree and accept that no statement or measurement contained in any brochure or advertisement issued by the Vendor or any agent on behalf of the Vendor relating to the Subject Property shall constitute a representation inducing the Purchasers to enter into the sale or any warranty forming part of this Agreement.
  2. Any statement, description or measurement contained in in any such particulars or in any verbal form given by or on behalf of the Vendor is for illustrative purposes and are not to be given as matters of fact.
  3. Any misstatement or omission or mis-description or incorrect information given verbally or in form of any printed particulars by any person on the Vendor’s behalf shall not give rise to any cause of action claim or compensation or to any right of rescission under this Agreement.
  4. The Purchaser shall have no right of action against any agent, employee or any person whatsoever connected directly or indirectly with the Vendor whereby any mistake, omission, discrepancy, innaccuracy, misstatement or misrepresentation may have been published or communicated to the Purchaser during the course of any representation or negotiation leading up to the sale.
  5. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes and extinguishes any representations or warranties (if any) previously given or made accepting those contained in the Agreement and no variation shall be effective unless agreed and signed by the parties or by some person duly authorised by each of them.

You will also note that the sales advice note from the auctioneer/estate agent will be “subject to contract/without prejudice/contract denied” which is an indication that you will only be able to rely on what is contained in the contract or is clarified/confirmed between the solicitors as they negotiate a binding contract.

It can be a struggle for the solicitor to temper the enthusiasm of the inexperienced purchaser because they will assume what is being said to them by the agreeable vendor or estate agent can be relied on. Maybe it can, maybe it cannot and if there is a dispute you will need to look to the written agreement between the parties to see exactly where you stand.

And the written agreement between the parties is the Law Society Standard Conditions of Sale 2019 edition.

IDENTITY

11. (a) The Purchaser Accepts the evidence of identity as may be gathered from the documents specified in the Documents Schedule. The Vendor confirms that he has furnished to the Purchaser such information as is in his possession relative to the identity and extent of the Subject Property, but the Vendor is not and shall not be required to define exact boundaries, fences, ditches, hedges or walls or to specify which (if any) of the same are of a party nature, and the Vendor is not and shall not be required to identify parts of

the Subject Property held under different titles.

RIGHTS – LIABILITIES – CONDITION OF SUBJECT PROPERTY

13. The Vendor confirms that he has disclosed before the Date of Sale, in the Particulars the Special Conditions or otherwise, all easements, rights, reservations, exceptions, privileges, covenants, conditions, restrictions, rents, taxes and other liabilities (not already known to the Purchaser or apparent from inspection) which are known by the Vendor to affect the Subject Property and are likely to affect it following Completion.

14. Subject to General Condition 13, the Purchaser Accepts that the Subject Property is sold and the Purchaser shall be deemed to buy:

(a) with full notice of the actual state and condition of the Subject Property and

(b) subject to (i) all Leases (if any) mentioned in the Particulars or in the Special Conditions and (ii) all easements, rights, reservations, exceptions, privileges, covenants, conditions, restrictions, rents, taxes, liabilities, outgoings and all incidents of tenure affecting the Subject Property (each a “Relevant Provision”) and

(c) notwithstanding any partial statement or description of the Lease or the Relevant Provision in the Particulars or in the Special Conditions or in any document specified in the Documents Schedule.

Conclusion

I hope you see from these conditions in the contract for the sale of property are sufficient to cast aside any warranty or representation that was made in the run up to the binding contract coming into effect.

And that you simply cannot rely on these statements, no matter how well intentioned or helpful or clarifying they were intended to be.

Categories
Debt Problems | Bankruptcy Property Law

Did Lease Granted by Borrower Prevent AIB From Securing Possession of D4 Property?

differential costs order

AIB granted a loan to Richard Finbarr Fitzgerald and the parties entered into a mortgage contract. The 1995 mortgage, registered in the Registry of Deeds, was secured on a flat in Dublin 4 and the bank now sought an order for possession.

However, there was a problem.

Fitzgerald had gone bankrupt in January 2020 but had previously granted a 35 year lease on the flat to Ms Daly in 2002. The question then arose in this case as to whether this lease was void as against the bank and they could go ahead and recover possession, or did this lease snooker the bank and prevent repossession.

The bank were seeking to recover a debt outstanding from a loan granted in 2015.

The bank’s position was that Fitzgerald needed the consent in writing of the lender if he was going to grant a lease on the property, pursuant to the 1995 mortgage which states

“The Mortgagor shall not be entitled without the consent in writing of the Bank to exercise the powers vested in him by section 18 of the said Conveyancing Act of 1881 so long as any moneys shall remain unpaid on this present security.”

It is worth noting that the Land and Conveyancing Law Reform Act 2009 changed the law in this area, specifically section 112 which states:

112.— (1) A mortgagor of land, while in possession, may, as against every other incumbrancer, lease the land with the consent in writing of the mortgagee, which consent shall not be unreasonably withheld.

[CA 1881, s. 18][CA 1911, s. 3]

(2) A lease made without such consent is voidable by a mortgagee who establishes that—

(a) the lessee had actual knowledge of the mortgage at the time of the granting of the lease, and

(b) the granting had prejudiced the mortgagee.

(3) A mortgagee of land while in possession or, after the mortgagee has appointed a receiver and so long as the receiver acts, the receiver, may, as against all prior incumbrancers, if any, and the mortgagor, lease the land provided—

(a) it is for the purpose of—

(i) preserving the value of the land, or

(ii) protection of the mortgagee’s security, or

(iii) raising income to pay interest due under the mortgage or otherwise reduce the debt,

or

(b) it is otherwise an appropriate use of the land pending its sale, or

(c) the mortgagor consents in writing, or

(d) the court in any action relating to the mortgaged land makes an order permitting such lease.

(4) In this section “ mortgagor” does not include an incumbrancer deriving title from or under the original mortgagor.

(5) The power of leasing conferred by this section applies only to mortgages created after the commencement of this Part.

However, the contractual position between Fitzgerald and the bank, as a consequence of the mortgage entered into between the parties, could not be retrospectively amended by the 2009 act as this act was not applied retrospectively to existing contracts and mortgages.

The High Court held that the 1995 mortgage was not affected by the 2009 act and held that all the authorities led one to the conclusion

“If such prior written consent is not obtained by the mortgagor and the mortgagor proceeds to enter into a lease with a tenant, the lease will be binding on the mortgagor as lessor, but as against the mortgagee, the lease will not be binding.”

The bottom line is that any potential impediment to the realisation of the security must be approved of by the lender. The principles in N17 Electrics Limited have been applied consistently and the onus on proving that a mortgagee had consent to a lease lies with the party seeking to rely upon the terms of the lease.

This lease, therefore, was void as against AIB and an order for possession was granted, with a stay for 6 months to allow obtain new accommodation having regard for the fact that she had lived there for two decades.

Read the full decision in Allied Irish Banks PLC and Richard Finbarr Fitzgerald [2020] IEHC 197.

Categories
Business and Company Law

Twitter ordered to disclose information about abusive parody account

Twitter has been ordered by the High Court to reveal who was in control of an account which used the Fastway Couriers logo and published abusive tweets on the platform.

Information about the account, which ridiculed and teased Fastway Couriers, is to be disclosed by Twitter pursuant to an order of Mr Justice Allen of the High Court on 5th June 2020.

The account underwent a number of name changes since 2019 with the most recent Twitter handle of “Fartways Deliveries Ireland”, having previously operated under the name “Fastwank Couriers” with the promise, “We fail to deliver your promises”.

Twitter suspended the account when Fastway Couriers legal team wrote to it advising of the legal proceedings. However, Twitter then restored the account once it established that the account was not in breach of Twitter’s rules.

The Twitter account had approximately 3,000 followers and Twitter concerned that genuine users of its service may be misled by the account into thinking it was a genuine account of Fastway Couriers.

Mr Justice Allen did not accept that anyone could have believed they were dealing with the genuine Fastway Couriers by reason of the incredible claims emanating from it, claims such as that some parcels had been eaten by drivers of the vans or flung over the rainbow.

Foul and abusive language also featured together with disparaging remarks about various locations in Ireland as being less than desirable destinations or places to live.

Whilst Fastway Couriers failed to persuade the High Court that its drivers were accused of using foul and abusive language it did succeed in its argument that its drivers and staff were unfairly depicted as incompetent and unprofessional.

Fastway Couriers also argued that their rights in their intellectual property-their logo, name and registered trade mark-were breached. The court agreed that the association of the tweets from the account with the company name and logo could be damaging and granted a Norwich Pharmacal Order on the basis that the Plaintiff had made out a “strong prima facie case” of damage and loss to its business by reason of the activities of the account controller.

The Norwich Pharmacal order allows Fastway Couriers to take legal proceedings against the operators of the account.

Read the full decision here: Parcel Connect -v- Twitter International Company [2020] IEHC 279

Categories
Business and Company Law Debt Problems | Bankruptcy

Promontoria Denied Judgment of €27 Million Because of Hearsay Evidence Rule

The Court of Appeal have held that the High Court was correct in refusing to grant summary judgment against the borrowers, Mr and Mrs Burns. It held that the evidence was not adequate and was inadmissible because it was hearsay evidence, and the usual way around the difficulty was not open to the applicant because it was not a bank.

Promontoria had bought the debt from the lender, Ulster Bank Ireland Limited. The case is Promontoria (Aran) Ltd -v- Burns [2020] IECA 87

Background

Gerry and Anne Burns were pursued by Ulster Bank Ireland Limited in 2013 on foot of guarantees they had given the bank for borrowings for their limited companies.

In 2015 Ulster Bank Ireland Limited sold the loan to Promontoria by way of a Deed of Transfer and Promontoria then sought summary judgment in the sum of 27,000,000 euros in the High Court. The application for judgment was based on an affidavit by an employee of the asset manager (formerly Capita Assets Services (Ireland) Limited) who provides debt collection services to Promontoria.

Mr Burns challenged this affidavit evidence on the basis that the employee was not employed by the lender, Ulster Bank, and could not swear on behalf of Promontoria as he had no first hand knowledge of the borrowing or debt alleged. This was hearsay evidence and inadmissible, accoring to Burns.

The High Court agreed with this argument and refused the application for judgment on the basis that his evidence was hearsay evidence.

Bankers’ Books Evidence Act 1879

The Bankers’ Books Evidence Act 1879 provides an exception to the hearsay evidence rule and allows banks to establish the proof of a debt by reference to the books and records of the bank and a course of dealing between the parties.

Promontoria was seeking to rely on the course of conduct between Ulster Bank Ireland Limited and Burns and Promontoria’s books and records. However, the Court of Appeal held that this relief was not open to Promontoria because neither it nor its debt collection service provider were banks and, thus, their evidence did not come within the Bankers’ Books Evidence Act 1879.

Ms Justice Baker said that letters of demand or facility letters do not prove their contents: “What is required to be proved by Promontoria is that monies were advanced on foot of certain agreements for repayment and subject to certain conditions, including a condition providing for the payment of interest, and that the monies fall due for payment.”

And “Further, the letters of demand, at best, taken alone do not prove more than the making of a demand. They do not prove the debt”.

In conclusion, Promontoria is not a bank and cannot avail of Bankers’ Books Evidence Act 1879 and could not swear to relevant matters in their affidavit seeking summary judgment.

Read the full decision here. (J. Baker)

Read the concurring judgment here. (J. Collins)

Categories
Business and Company Law

Are Your Website or App Cookies Compliant with Data Protection Laws in Ireland?

Let’s get it out of the way and answer the question, what is a Cookie?

A cookie is a small text file that may be stored on your computer or mobile device that contains data related to a website you visit. It may allow a website to “remember” your actions or preferences over a period of time, or it may contain data related to the function or delivery of the site.

The Data Protection Commission has published a report in April 2020 setting out its findings of a survey it has carried out on websites in Ireland. It has found that there is a great deal of non-compliance by website owners/operators and the Data Protection Commission has published guidance in this regard.

Firstly, however, it is noteworthy that the DPC has granted a grace period of 6 months for websites to become compliant-that is, until 5th October 2020.  At that point the DPC will pursue offenders.

The two pieces of law you must be aware of when it comes to cookies are

  1. Statutory instrument 336 of 2011, the e-Privacy regulations and
  2. The General Data Protection Regulations (GDPR)

The Data Protection Commission Guidance

  1. Do your cookies require consent? If the cookies involve the processing of personal data, yes is the answer. If, however, the cookies are used for the sole purpose of carrying out the transmission of a communication or are necessary to provide the service requested by the user, the answer is no, the cookies may be exempt from the regulations
  2. Consent cannot be bundled together-that is, you require consent for each purpose for which you intend processing the user’s data
  3. Pre-checked boxes, implied consent, and passively accepted consent are unacceptable; the consent must be specific and clear
  4. The DPC recommends that the website’s privacy statement and cookies policy are maintained separately, even though there may be a good deal of duplication between the two
  5. Cookie banners must not hide the website privacy statement of cookie policy and allow users to get more information about the use of cookies on the site
  6. The user must be able to easily withdraw consent for the use of cookies
  7. Non-exempt cookies cannot be switched on automatically when a visitor arrives on the website

The DPC intends taking enforcement action once the grace period is over-that is, from 5th October 2020.

You can read the full guidance document, Guidance on Cookies and Similar Technologies: Full Guidance Note here.