Business and Company Law | Terry Gorry & Co. Solicitors

A Company Director or Shareholder Cannot Represent the Company in Court

Are you the director or shareholder of a company? Did you know you cannot represent your company in Court? You must instruct a solicitor to act for the company.

Let me explain.

I have often seen company directors and/or sole shareholders in the District Court seeking to represent the company. The company is a separate legal entity, however, from the shareholders, directors and members and it may face prosecution or be engaged in legal proceedings and disputes from time to time-for example failure to file tax returns or health and safety prosecutions.

If the company was a natural person it could do so as the director or any individual can represent himself in Court. Whether that is a good idea or not, however, is another kettle of fish.

Many times, the director of the company will go to the Court himself and purport to speak on behalf of the company. This is not permissible, however, as a company director or shareholder or member does not have a right of audience in Court in Ireland.

This rule was first established in a case in 1969, the “Battle” (Battle v Irish Art Promotion Centre Limited) case. This decision was reaffirmed by the Supreme Court decision delivered in October 2018 between AIB Bank and Aqua Fresh Fish Limited.

The Supreme Court stated,

The so-called rule in Battle v. Irish Art Promotion Centre Limited [1969] I.R. 252, when complemented by the inherent jurisdiction and discretion of the Court to permit, in exceptional circumstances, representation of a company by a person who is not a lawyer with a right of audience, continues to be the law in this jurisdiction and is consistent with the Constitution.

Put simply the general rule is that a company must be represented by a solicitor; Courts have the power, in exceptional circumstances, to allow a person who is not a lawyer to represent a company in court. But the general rule is that only 3 categories of person have a right of audience in Court:

The parties in a case
A solicitor instructed by a party in the case
A barrister instructed by a solicitor for one of the parties in the case.

The Exceptions

The exceptional circumstances which may give rise to a Court permitting a company director to act for the company in Court are not clear and there are no guidelines you can follow or anticipate. Regard will be had by the Court to precisely what type of representation the non lawyer individual- director or otherwise-intends providing-for example, whether he/she intends acting in a ‘lawyer’ capacity before and at trial or merely acting on one occasion in Court or in a lesser capacity. Presumably the Court will also consider the complexity of the issues involved in the case and whether the administration of justice will be significantly hampered or delayed.

In addition to the exceptional circumstances referred to above there is a statutory exception pursuant to the Companies Act, 2014-that is, where a company is charged with an indictable offence it may appoint a representative to appear on its behalf in Court.

Moreover, a Court may listen to the views of a director in the interests of justice and to assist the Court; this is a different matter, however, to representing the company as a ‘lawyer’.

Conclusion

A company director or member or shareholder cannot represent their company in Court, the company must ‘lawyer up’, save for exceptional circumstances.

GDPR Data Protection Legal Actions in Ireland-the Essentials

Were you worried in the lead up to GDPR?

Has the danger passed? Are you just keeping the head down and hoping for the best?

Are you in a good place with respect to compliance or do you still have some concerns but hope the fears generated were exaggerated?

Just to remind you new regulations concerning personal data protection came into force in the EU from 25th May, 2015: the GDPR regulations.

What has happened since then? Was the fear and loathing justified? Was it another “Y2K” scare-all hat and no cattle-or is it too early to decide?

Firstly, GDPR came into effect in Ireland 24 hours after the commencement of a new data protection act, the Data Protection Act, 2018. There is a certain degree of trepidation amongst data controllers and processors that this new law will lead to a significant increase in the number of legal cases arising as a result of breaches for the law now allows data subjects bring civil actions for compensation.

Collective Actions

Data subjects can also now authorise not for profit organisations to bring complaints and act on their behalf. This kind of “class” action is a new development in Ireland and is likely to be availed of when there is a significant breach of personal data on a wide scale affecting a large number of individuals.

Two of these not for profit type organisations, NOYB (‘None of Your Business’) in Austria and La Quadrature du Net (‘La Quad’) filed complaints in some European countries against large tech companies within a short time of GDPR coming into effect. There is nothing stopping them from popping up in Ireland.

Right to Compensation and Damage

The right to compensation and damage is set out in regulation 82 which states,

Right to compensation and liability

1. Any person who has suffered material or non-material damage as a result of an infringement of this Regulation shall have the right to receive compensation from the controller or processor for the damage suffered.

2. Any controller involved in processing shall be liable for the damage caused by processing which infringes this Regulation. A processor shall be liable for the damage caused by processing only where it has not complied with obligations of this Regulation specifically directed to processors or where it has acted outside or contrary to lawful instructions of the controller.

3. A controller or processor shall be exempt from liability under paragraph 2 if it proves that it is not in any way responsible for the event giving rise to the damage.

4. Where more than one controller or processor, or both a controller and a processor, are involved in the same processing and where they are, under paragraphs 2 and 3, responsible for any damage caused by processing, each controller or processor shall be held liable for the entire damage in order to ensure effective compensation of the data subject.

5. Where a controller or processor has, in accordance with paragraph 4, paid full compensation for the damage suffered, that controller or processor shall be entitled to claim back from the other controllers or processors involved in the same processing that part of the compensation corresponding to their part of responsibility for the damage, in accordance with the conditions set out in paragraph 2.

6. Court proceedings for exercising the right to receive compensation shall be brought before the courts competent under the law of the Member State referred to in Article 79(2).

The game changer in this regulations is the reference in subsection 1 to “material or non-material damage”.

Up to this point you had to show you had suffered actual loss or damage in Ireland to be compensated, but you could not be compensated for non-material damage.

You will also see that subsection 1 refers to “controller or processor”. Prior to this only the controller could be held liable but now a processor can be also named as a defendant.

Article 78 sets out the right of the data subject to sue-that is, a judicial remedy. It states,

Article 78

Right to an effective judicial remedy against a supervisory authority

1. Without prejudice to any other administrative or non-judicial remedy, each natural or legal person shall have the right to an effective judicial remedy against a legally binding decision of a supervisory authority concerning them.

2. Without prejudice to any other administrative or non-judicial remedy, each data subject shall have the right to a an effective judicial remedy where the supervisory authority which is competent pursuant to Articles 55 and 56 does not handle a complaint or does not inform the data subject within three months on the progress or outcome of the complaint lodged pursuant to Article 77.

3. Proceedings against a supervisory authority shall be brought before the courts of the Member State where the supervisory authority is established.

4. Where proceedings are brought against a decision of a supervisory authority which was preceded by an opinion or a decision of the Board in the consistency mechanism, the supervisory authority shall forward that opinion or decision to the court.

This right to bring a data protection action in Ireland is set out in section 117 of Data Protection act, 2018. This action is founded on tort-that is, a civil wrong, and can be instituted in the Circuit Court or High Court.

Section 117 obliges the plaintiff data subject to prove that

his or her rights under a relevant enactment have been infringed as a result of the processing of his or her personal data in a manner that fails to comply with a relevant enactment

The critical change now is a data subject can sue for material and non material damage and non material damage is set out in recital 85 as follows:

A personal data breach may, if not addressed in an appropriate and timely manner, result in physical, material or non-material damage to natural persons such as loss of control over their personal data or limitation of their rights, discrimination, identity theft or fraud, financial loss, unauthorised reversal of pseudonymisation, damage to reputation, loss of confidentiality of personal data protected by professional secrecy or any other significant economic or social disadvantage to the natural person concerned

You will see from regulation 82 above, section 2, that the controller and processor will be held liable where they are not compliant with the regulations; it is irrelevant whether they were negligent or at fault in any way.

How much compensation?

It is too early to say what level of compensation Irish courts will award, especially for non material damage such as damage to reputation or unauthorised reversal of pseudonymisation or loss of confidentiality.

Clearly, from the perspective of a controller or processor the smart thing to do is try to ensure that there is no breach of personal data rights in the first place. However, it is vital that a breach is notified to the Data Protection Commissioner within 72 hours of becoming aware of the breach as the Act refers to doing so “without undue delay”.

Section 85 Data Protection Act 2018 states:

85. Where a processor becomes aware of a personal data breach, the processor shall notify the controller on whose behalf the data are being processed of the breach—

(a) in writing, and

(b) without undue delay.

Competition Law in Ireland-the Essentials for Small Business Owners

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:

The prohibition on anti competitive arrangements
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

Is the undertaking ‘dominant’
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

On summary conviction, a class A fine
Conviction on indictment, a fine of up to €5,000,000. See section 8 Competition Act, 2002.

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

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:

Prove the facts that support your case
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

Whether you have a cause of action
What the likelihood of success is
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.

Unjust Enrichment and Quantum Meruit-Why You Should Know About This Equitable Principle

Have you ever heard of a latin phrase, “quantum meruit”?

You may be thinking that you have not, and you are none the worse for it, either.

However, this archaic latin phrase could become your friend some day if you are involved in a dispute about a contract you are a party to.

Let me explain.

Firstly, “quantum meruit” means “what he has earned” or “as much as he is entitled to”. It would arise where you claim you are entitled to be paid for goods or services supplied to the other party where you are not covered by the strict interpretation of the terms of the contract, or even where there is no contract.

It is said, therefore, to be a quasi-contractual claim.

Let’s say you have agreed some terms of a proposed contract, but you have not agreed on price. Nevertheless, you perform the contract with the implied or express agreement of the other party.

The other party cannot claim that because you did not agree on price that you are not entitled to be paid. No, you would be entitled to be paid on a “quantum meruit” basis-that is, as much as you have earned or deserve.

Another example would be where the other party has agreed to pay you a “reasonable sum” for the goods or services or where the extent of the work to be performed was agreed and set out in the original contract, but the work carried out has exceeded what was agreed.

A further example would be where you have exceeded the precise terms of the contract. This could arise in an employment situation, or in a typical building/construction situation where you go over and above what you were supposed to do and the other party allows you to do so and is happy to enjoy the extra benefit of your work or goods.

At its essence, therefore, a quantum meruit claim is based on a claim for a reasonable sum for the services rendered or goods supplied.

Quantum meruit is what you might be awarded arising from your claim based on the equitable principle of unjust enrichment-that is, you are claiming that the other party has been enriched at your expense and you are entitled to be paid in equity and good conscience.

What is unjust enrichment?

Unjust Enrichment

Broadly speaking there will be four elements to unjust enrichment:

You provided valuable goods or services to the other party
The other party accepts your goods or services and benefited from them
The other party was reasonably notified, or should have inferred, that you expected to be paid
It would be inequitable or unconscionable for the other party not to pay

What you will be entitled to, if you are successful in your legal proceedings, will be quantum meruit-that is, what is reasonable for your goods/services.

You will see from the above that unjust enrichment can arise

Where there is no contract
Where there is a contract, but its terms have been exceeded by one of the parties.

A useful decision in this area of law is Vedatech Corporation v Crystal Decisions (UK) Ltd. & Anor [2002] EWHC 818 (Ch) (21st May, 2002) [2002] EWHC 818 (Ch).

The circumstances where a claim of unjust enrichment can arise are myriad, and include employment, construction, and in all situations where goods or services are supplied.