Avoiding Summary Judgments-a Credible Defence is Required, Mere Statements Are Insufficient

 

summary judgment

You might have come across a particular type of individual since the property/economy crash in 2007/2008.

He, for it was normally a man, was up to his eyeballs in debt and was a type of amateur lawyer who had decided that easy, technical defences could be put forward if and when the crap hit the fan and the lender brought him to Court to seek Judgment against him.

These technical defences, if you could call them that, included allegations of forged signatures on loan documents, claims of being forced to sign mortgages under duress, and so forth.

As well as these ‘defences’, which were bound to fail, you may recall the Kilkenny Trust which was a most capital swizz which promised to make your debt disappear by putting your property into a trust and subsequently leasing it back at a nominal rent, thereby staying in your home and putting it beyond the reach of the big, bad banks who had made a bad decision in giving you the money in the first place.

While some might generously describe this individual as an amateur lawyer others would call him a charlatan, a chancer, a snake oil salesman, a swindler, a huckster, a con artist, a mountebank-choose your poison.

Anyway, these technical defences, if you could call them that, were put forward in Court from time to time. And what happened?

Summary legal proceedings and summary judgment

Summary proceedings are the type of legal proceedings used to pursue a liquidated sum or specific debt. An application for a summary judgment will succeed if it is clear the defendant/debtor has no arguable defence. The defendant debtor, if he claims to have a defence, will seek, on that basis, to have the case heard in a plenary hearing in the High Court, and to avoid judgment.

The test of what is required in respect of the defence has been considered by the High Court in Aer Rianta v. Ryanair [2001] 4 I.R. 607 where it was held that the test was there is no probability of a bona fide defence.

In a 2014 case, IBRC v. McCaughey [2014] 1 IR 749, it was held that it must be clear there is no arguable defence.

The Court of Appeal has now issued a judgment in May 2018 which deals with the issue again in AIB v Stack & Stack [2018] IECA 128. AIB were seeking a judgment against the Stacks for approximately €3,000,000.

The Stacks resisted the application and argued that they had a defence to the claim and wished the case to be transferred to the High Court for a plenary hearing. The basis of their defence included the following claims of the Stacks:

  • Mrs Stack’s signature was a forgery
  • no proof that the company had accepted the terms set out in the letter of loan sanction
  • the loan was not conditional on guarantees being provided
  • Mrs. Stack had no involvement in the day to day running of the company
  • Mrs. Stack had never received any independent legal advice.

The High Court refused to transfer the case for a plenary hearing and held that the mere assertion of an alleged fact, such as the claim of the forged signature, did not make it true and there was no evidence to support the assertion. In like fashion the High Court held that putting forward statements or assertions without supporting evidence or documentation was not enough to prove they had a genuine defence to the claim.

The Stacks appealed to the Court of Appeal and a decision was delivered on 10th May, 2018 in AIB v Stack & Anor.

The Court of Appeal agreed with the High Court and dismissed the appeal.

It held that the Court must be very clear that there is no defence to the proceedings before it will grant judgment. It acknowledged that the bar to have the case sent into a plenary hearing was a low one but the Stacks had failed to clear that hurdle as they were unable to put forward anything but bald assertions and statements.

The Court of Appeal confirmed that there must be a credible defence based on facts. In this case the Court held that the Stacks failed to put forward any evidence to support the facts which they alleged-for example, the allegation of the forged signature.

Conclusion

The bar to overcome to avoid judgment is a low one but the defendant must have a real defence based on facts supported by evidence. Statements or denials or assertions will not be enough.

And if you are approached in a bar by a middle aged man who claims to have found an easy way to avoid judgment for an eye watering debt, treat him with great caution.

Open Offers to Settle Legal Proceedings and Legal Costs-a Warning

open settlement offers

Most people are aware that the cost of legal proceedings, particularly litigation proceedings in the High Court, are incredibly expensive.

I have previously written about certain tools you can use to compromise or settle legal proceedings: Calderbank letter and lodgments. I have also written about the use of ‘without prejudice’ communications to attempt to settle a claim and avoid the attendant legal costs.

A recent High Court decision in O’Reilly & anor -v- Neville & ors [2018] IEHC 228 by J. Binchy shows the danger of ignoring reasonable open offers-that is, offers made in open correspondence.

The facts of the case- O’Reilly & anor -v- Neville & ors

The case involved Mr. and Mrs. O’Reilly suing the defendants for breach of contract arising from defects in a dwellinghouse purchased by the O’Reillys from the defendants. J. Binchy, in relation to the substantive action, held as follows:

In summary, I made an order for specific performance, in favour of the plaintiffs of a building agreement entered into between the parties on 30th March, 2005 (the “building agreement”), and I also ordered that the defendants pay the plaintiffs the cost of renting alternative accommodation since they vacated, in August, 2010, the dwellinghouse constructed for them by the defendants pursuant to the building agreement.

However, he held over the questions of costs until a later date, and delivered his judgment on 18/01/2018.

Winner takes all and costs follow the event

The normal rule is that the winner usually has his costs paid by the losing party. This is set out in the Rules of the Superior Courts, Order 99 rule1(3):

(3) The costs of every action, question, or issue tried by a jury shall follow the event unless the Court, for special cause, to be mentioned in the order, shall otherwise direct.

The O’Reillys naturally argued that they were entitled to have their costs awarded to them against the defendants. However, the Judge can consider offers made by the defendant to try to settle the case early as Order 99 rule 1A.(1)(b) states:

(b) The High Court, in considering the awarding of the costs of any action (other than an action in respect of a claim or counterclaim concerning which a lodgment or tender offer in lieu of lodgment may be made in accordance with Order 22) or any application in such an action, may, where it considers it just, have regard to the terms of any offer in writing sent by any party to any other party or parties offering to satisfy the whole or part of that other party’s (or those other parties’) claim, counterclaim or application.

Open offers

In this case the defendants made 6 open offers in an attempt to settle the case and avoid the costs of a hearing which ultimately went on for 11 days. The Defendants argued that these offers should be taken into account by J. Binchy when deciding costs. Mr. Justice Binchy agreed.

He decided, It follows from this that the defendants should be awarded all costs incurred by them in these proceedings from 18th February 2016 onwards, save only those costs that were incurred in connection with the claim of the plaintiffs for reimbursement of the cost of renting alternative accommodation. The plaintiffs are entitled to an order for all other costs incurred by them in the proceedings i.e. all costs incurred by them up to 18th February, 2016, together with such costs as may be deemed to relate only to recovering the cost of renting alternative accommodation.

He also held: Parties to proceedings are to be encouraged and not discouraged from putting forward proposals which will lead to an early resolution of litigation with all attendant benefits, including significant savings of costs and court time. All of this is recognised by O 99, r 1 A (1) of the Rules of the Superior Courts.

Conclusion

The successful party in legal proceedings cannot always assume he will be awarded his costs as against the other party, particularly if he refuses reasonable efforts to compromise the case.

The Rules of the Superior Courts make provision for this and the High Court judges must have regard for these rules and the conduct of the parties to the proceedings.

You can read the full decision of Mr. Justice Binchy in O’Reilly & anor -v- Neville & ors [2018] IEHC 228 by clicking on the link.

Personal Injury Awards Reduced by Court of Appeal-How Are General Damages to Be Quantified?

personal injury claims awards ireland

How do you value an injury you have suffered?

Can a person who has lost a limb such as an arm or leg or been rendered quadriplegic be truly put in the position they enjoyed before the accident by an award of damages?

Nevertheless, This is the task of the Courts in personal injury cases and the avowed goal is to put the person who has suffered the injury in the same position they would have been in if the injury had not occurred. Most people would say that this is not possible.

Nevertheless, this is what happens at the end of a successful personal injuries claim.

The amount or quantum of damages is a controversial topic with many members of the general public and the insurance industry saying the awards are far too high whilst victims and their families have a diametrically opposed view.

In 2016, in a Court of Appeal Case called Shannon -v- O’ Sullivan [2016] IECA 93 the Court of Appeal gave some much needed guidance as to how the amount of these awards should be arrived at.

The facts in Shannon v O’Sullivan

The defendant in this case appealed against what she saw as excessive awards to Mr. and Mrs. O’Sullivan arising out of a road traffic accident in November, 2012. The High Court in Kilkenny had awarded Mrs. Shannon €50,000 in respect of pain and suffering to date, €80,000 in respect of pain and suffering into the future and agreed special damages of €1,463, a total of €131,463.

Mr. Shannon had been awarded €91,463, made up as to €35,000 in respect of pain and suffering to date, €55,000 in respect of pain and suffering into the future and an agreed sum of €1,463 in respect of special damages.

In the original HIgh Court case the defence robustly challenged the extent of the Shannons’ injuries and their credibility. They did so because they claimed the Shannons did not seek medical attention for some weeks after the collision, they had not gone to their GP but had gone to a retired doctor, had been referred to a consultant psychiatrist in May, 2014 and were only then diagnosed with psychological injuries.

The High Court trial Judge, however, found them to be credible, hard working witnesses and accepted the medical evidence on their behalf. It was on this basis that the awards were arrived at.

The appellant’s case in the Court of Appeal was that the Shannons required little or no medical intervention and the awards of the High Court to both of them were excessive. The injuries were not of such a nature as to deprive either of the Shannons of any quality of life and they continued working at all times after the accident and should not attract awards which would be more appropriate to severe injuries.

The principles to be applied

Firstly, the Court of Appeal accepted that it had not heard the evidence in the High Court and therefore the court of Appeal was bound by the findings of fact in the High court case. The Court of Appeal could only overturn the award of damages if it was unreasonable and disproportionate, or as the Court of Appeal put it: that no reasonable proportion exists between the sums awarded and that which the appellate court itself considers appropriate in respect of the plaintiffs’ injuries.

This issue had been considered in the following two cases:

  1. Foley .v. Thermal Cement Products Ltd (1954) 90 I.L.T.R. 92
  2. Rossiter v. Dun Laoire Rathdown County Council [2001] 3 I.R. 578

The test is whether there is a reasonable proportion between the sum (awarded and the appeal court’s assessment) or whether the verdict is an entirely erroneous estimate of the damage or is plainly unreasonable. However, the Court of Appeal should only interfere with the award if there is a discrepancy of at least 25 % between the amount awarded by the lower court and the Court of Appeal’s view.

In other words, a moderate adjustment will not be made by the Court of Appeal.

Measuring damages

The Court of Appeal noted that the quantification of damages had 3 widely accepted features-it must be:

  1. fair to the plaintiff and the defendant
  2. proportionate to social conditions, bearing in mind the common good, and
  3. proportionate within the scheme of awards made for other personal injuries

The Court of Appeal noted that the goal of damages in personal injury cases is to put the injured party in the position they would have been in if the injury had not occurred. However, the Court of Appeal also recognised that this is unattainable in many cases, especially those of serious injury.

The Court of Appeal held the approach to be taken was to firstly look at the injuries of the claimant and see where they lie on the general spectrum of personal injuries ranging from catastrophic at the top of the range to modest injuries at the bottom.

Catastrophic injuries damages have a limit of approximately €450,000 or thereabouts for general damages. Therefore the Court of Appeal in this case held that the approach to be taken was to start at this limit and work back down to see where on the spectrum the instant injuries lay.

The Court helpfully set out the questions which most judges will be guided by in assessing general damages as follows:

Most judges, when it comes to assessing the severity of any given injury and the appropriate sum to be awarded in respect of pain and suffering to date, will be guided by the answers to questions such as the following:-:

(i) Was the incident which caused the injury traumatic, and if so, how much distress did it cause?
(ii) Did the plaintiff require hospitalisation, and if so, for how long?

(iii) What did the plaintiff suffer in terms of pain and discomfort or lack of dignity during that period?

(iv) What type and number of surgical interventions or other treatments did they require during the period of hospitalisation?

(v) Did the plaintiff need to attend a rehabilitation facility at any stage, and if so, for how long?

(vi) While recovering in their home, was the plaintiff capable of independent living? Were they, for example, able to dress, toilet themselves and otherwise cater to all of their personal needs or were they dependent in all or some respects, and if so, for how long?

(vii) If the plaintiff was dependent, why was this so? Were they, for example, wheelchair-bound, on crutches or did they have their arm in a sling? In respect of what activities were they so dependent?

(viii) What limitations had been imposed on their activities such as leisure or sporting pursuits?

(ix) For how long was the plaintiff out of work?

(x) To what extent was their relationship with their family interfered with?

(xi) Finally, what was the nature and extent of any treatment, therapy or medication required?

In short, a Court must:

However, a judge must act rationally and take into account, in summary, the severity of the injury, how long it has taken the plaintiff to recover, whether it has short-term or long-term consequences and if so the impact on the plaintiff’s life in all its different aspects including his family, his work his sports or hobbies or pastimes, in addition to any other features that are relevant in the plaintiff’s particular circumstances.

Decision

The Court of Appeal disagreed with the High Court judge who found that the plaintiff’s injuries were ‘significant’. The Court looked at the pain and suffering, limitation of lifestyle, pain and suffering into the future, etc. and decided that the injuries were only ‘modest’ when looked at on the spectrum of injuries ranging from minor to catastrophic.

In Mr. Shannon’s case the award of general damages was reduced from €90,000 to €40,000 and Mrs. Shannon’s award was reduced from €130,000 to €65,000.

This decision of the Court of Appeal to reduce the general damages award by 50% or thereabouts is seen as part of a trend involving the Court of appeal reducing personal injury awards.

For example, in Payne v Nugent [2015] IECA 268 the Court of Appeal reduced the general damages award from €65,000 to €35,000 and in Nolan -v- Wirenski [2016] IECA 56 the general damages awarded by the High Court was reduced from €120,000 to €65,000.

It is worth noting that these reductions in this emerging trend, if it is a trend, only apply to general damages awards as special damages awards are to continue to be assessed separately.

If you click on any of the 3 links above you can read the full decision of the Court of Appeal in each case.

Competition Law in Ireland-the Essentials for Small Business Owners

competition law ireland

Have you been the victim of unfair competition or anti competitive practices in your industry?

Perhaps you have encountered an abuse of dominance by one or more competitors? There is strong competition law on the statute books to protect you, you know.

The principal piece of legislation deal with with competition law in Ireland is the Competition Act, 2002 and Competition and Consumer Protection Act 2014. Part 2 of the Competition Act, 2002 deals with the two main prohibitions:

  1. The prohibition on anti competitive arrangements
  2. The prohibition on abuse of dominance

Anti Competitive Arrangements

Section 4(1) Competition Act 2002 states:

4.—(1) Subject to the provisions of this section, all agreements between undertakings, decisions by associations of undertakings and concerted practices which have as their object or effect the prevention, restriction or distortion of competition in trade in any goods or services in the State or in any part of the State are prohibited and void, including in particular, without prejudice to the generality of this subsection, those which—

( a) directly or indirectly fix purchase or selling prices or any other trading conditions,

( b) limit or control production, markets, technical development or investment,

( c) share markets or sources of supply,

( d) apply dissimilar conditions to equivalent transactions with other trading parties thereby placing them at a competitive disadvantage,

( e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which by their nature or according to commercial usage have no connection with the subject of such contracts.

Sections 4(2) and 4(5) set out the exceptions to section 4(1).

The prohibition only applies to separate undertakings, which is defined as

‘ undertaking ’ means a person being an individual, a body corporate or an unincorporated body of persons engaged for gain in the production, supply or distribution of goods or the provision of a service and, where the context so admits, shall include an association of undertakings.

The prohibition does not apply to intra-group transactions as there is only one undertaking, from a competition law perspective. An agreement between employer and employee will not be covered, either, as an employee is not an undertaking. Therefore employment contracts will not fall under the remit of the Competition Act, 2002 and any issues in relation to restrictive covenants in contracts of employment should be looked at under common law restraint of trade principles.

The prohibition includes

  • Anti-competitive agreements
  • Concerted practices

An agreement will be seen to exist where one undertaking agrees with another undertaking to limit its freedom of action so as to restrict competition in the marketplace. A concerted practice is a form of coordination between undertakings.

The intention of the parties is irrelevant, it is the object or effect of the agreement that needs to be reviewed.

If the agreement ultimately benefits consumers it will fall within the exceptions found in section 4(5) and will be exempt from the prohibition.

The Competition Authority, established by the Competition Act, 2002 was dissolved and replaced by the Competition and Consumer Protection Commission in the Competition and Consumer Protection Act 2014. It has the power to issue declarations that agreements or concerted practices are covered by section 4(5) and does not fall foul of section 4(1).

Horizontal and Vertical Agreements

A horizontal agreement is an agreement between undertakings between competitors-that is, at the same end of the supply chain.

Vertical agreements are agreements between undertakings at different ends of the supply chain-for example, manufacturers and distributors.

Horizonatal agreements are hard core offences and subject to severe penalties as they are agreements between competitors and are more likely to be anti-competitive. Vertical agreements, by contrast, are generally exempt as they have a lower risk of anti competitive effect.

Abuse of Dominance

Section 5 Competition Act, 2002 deals with the abuse of dominance prohibition:

5.—(1) Any abuse by one or more undertakings of a dominant position in trade for any goods or services in the State or in any part of the State is prohibited.

No exemption is possible from this prohibition, it is an absolute prohibition and dominant companies have a particular responsibility to avoid abuse of that dominance.

What is a dominant position? There is no widely accepted definition but any company with in excess of 40% of the market is going to raise concerns. The test is whether the concern can act independently of others in the marketplace.

Other factors which will be looked at in determining dominance will include:

  • Barriers to entry to the market
  • Customer switching costs
  • Barriers to expansion
  • Market share of the entity being looked at-a consistent market share of over 40% will cause concern

The prohibition in section 5 above refers to ‘one or more undertakings’, therefore a situation of collective dominance could arise if more than one undertaking acts in concert with another.

When looking at a breach of section 5 consideration will be given to

  1. Is the undertaking ‘dominant’
  2. Has its conduct been an abuse of its dominance-the conduct is not abusive if it can be objectively justified and proportionate to a legitimate aim.

Examples of abuse of dominance

Examples would include:

  • Abusive pricing
  • Exclusionary abuse-for example, predatory pricing, single branding, loyalty rebates, refusal to supply, tying and bundling

Penalties

Penalties for hard core offences-that is, breaches of section 4(1) above can be

A breach of the Competition Act, 2002 can also lead to personal liability for an officer or employee of the company.

Enforcement of the Competition act, 2002 is through both civil and criminal means.

Any aggrieved person can make a complaint to the Competition and Consumer Protection Commission, formerly the Competition Authority. This body and the DPP can institute criminal proceedings to enforce the Competition Act, 2002 and the Competition and Consumer Protection Commission has extensive powers to carry out raids to obtain records relating to competition law. This allows them to search both business premises and private homes of executives or officers of the company.

They can also summons witnesses to attend before the Commission.

Moreover, an aggrieved person can institute legal proceedings in the Circuit or High Court for breach of section 4 or 5 of the Competition Act, 2002. The aggrieved person, if successful, may obtain an injunction and/or damages and/or a declaration from the Court.

An important thing to consider is that the Competition Act, 2002 shifts the burden of proof from the prosecutor to the defendant in a criminal prosecution and criminal prosecutions can be carried out by the Commission for summary offences and the DPP can prosecute on indictment.

Section 50 of the Act also provides protection for whistleblowers who act in good faith.

Conclusion

If you are a small business owner and you have been the victim of abuse of dominance or anti-competitive arrangements the Competition act, 2002 provides strong remedies to put a stop to it and make competition in your market fairer.

‘Building a Case’-It’s Time to Put the Shovel Down

building a legal case

From time to time I am approached by a potential client who wants to ‘build a case’ against their former employer. Or against a competitor, or neighbour, or business rival.

Or against some guy or girl who caused offence at one time or other, just to ‘teach them a lesson’.

I quickly let the person know I have no interest in ‘building a case’, and advise them against it, too.

Let me tell you why.

If you have a valid legal claim or cause of action the ‘case/claim’ should be able to stand on its own two feet, without any requirement for ‘building’. To win a legal case you will need to do two things:

  1. Prove the facts that support your case
  2. Prove the law that supports your case

If you do not have facts that support a case from the outset all the building in the world will do you no good. You will be scrabbling around in desperation to try to cobble together some mish mash to get one over on your former employer, or the other party if it is not an employment related dispute. You would be far better off recognising that you are aggrieved, perhaps insensibly angry, and want to teach him/her a lesson.

But you run the risk of making an even bigger mess for yourself, and wasting time and money in the process if you embark on a course of ‘building a case’.

Look: when you are in a hole the first thing you need to do is put the goddamned shovel down.

Don’t misunderstand me. If you have a case a decent lawyer will recognise it very quickly.

What you need to do is give him/her the facts and relevant documentation surrounding your employment. Your solicitor will quickly recognise

  1. Whether you have a cause of action
  2. What the likelihood of success is
  3. What the possible remedies are.

When you have this information you will be ready to make a cool, rational decision about proceeding or not.

‘Building a case’

Building a case is not like building a wall or a dog house. When you are building a wall and there are no blocks you can use bricks, or stones. Building a dog house can involve all sorts of alternative materials.

But a legal case or claim must stand on its own facts. You cannot make them up. You cannot have ‘alternative facts’ as the White House spokesperson claimed in relation to Trump’s vainglorious claim that his inauguration crowd was the biggest since the pan was sliced.

Alternative facts are an oxymoron-a contradiction in terms.

Neither can you have alternative law-there has either been a breach of the law, and a consequent breach of your rights, or not.

It doesn’t matter whether it is an employment matter, defamation, property dispute, personal injury, breach of constitutional right, probate dispute, a commercial dispute, or a family law row.

The facts are the facts and the law is the law. Sooner or later your ‘case’ is going to have to face these inescapable facts and you are going to have to discharge the burden of proof to win your case.

As Charles Dickens said in Hard Times,

“Now, what I want is Facts. Teach these boys and girls nothing but Facts. Facts alone are wanted in life. Plant nothing else, and root out everything else. You can only form the minds of reasoning animals upon Facts; nothing else will ever be of any service to them.”

I do not agree with this quotation, not in the slightest. Children should be taught much more than facts. Things like decency, honesty, kindness, generosity, an appreciation for beauty, art, literature, etc.

But when you are considering commencing legal proceedings or bringing an employment related claim you would do well to remember this quotation, for your case will walk slowly at first, and then run; or fall flat on its face.

Spend your time scrambling around in the weeds for stuff to ‘build a case’ and you will almost certainly fall.