The Quinn Children Consent to Judgments Totaling €440 Million

There was a large group of photographers outside the entrance to the Four Courts a few weeks ago as I walked out to the WRC in Ballsbridge for an employment hearing. As I walked past the building entrance the targets of their interest strolled down the street to enter the Round Hall and I guessed, correctly, who they were: “the Quinn children”.

When I say “the Quinn Children” I refer to the adult children of Ireland’s once wealthiest man, Seán Quinn.

Even if I never met them that morning on the quays by sheer coincidence I would have had an interest in their case.

Because their case was one in which they, the Plaintiffs in the action, were suing IBRC, formerly known as Anglo Irish Bank. Their claim was that €415 million guarantees they provided for loans to the Quinn Group in 2007 and 2008 were invalid and, therefore, unenforceable.

When I read that this was the basis of their claim-their cause of action-I was interested to see how they were going to win that argument. For it is an argument that has been made, for the last 10 years or so, by many small business owners, wives and girlfriends of small company directors, who argued that they could not be held to the guarantee they signed.

For all sorts of reasons-for example, signing a document in the kitchen of their home for their spouse who was a small business owner and discovering years later that this document was, in fact, a guarantee and the lender now wanted to be paid.

So, I kept an eye on the case as it was reported in the papers and on TV/radio.

It appeared to be the case that the Quinn children were claiming that they were put under undue influence by their father, Seán Quinn, into signing the guarantees. And what’s more, they claimed they were naïve, inexperienced, and unsophisticated and didn’t understand what they were doing or the significance of the papers they were signing.

This line of argument was, as you would expect, rejected by the bank’s lawyers who pointed out that these ‘children’ were experienced, well educated, professional adults and the notion that they did not understand what they were signing or what it meant was fanciful nonsense.

Significant ruling by Judge-game changer?

But the case took an unexpected turn last week leading to settlement talks which are ongoing. These talks commenced after the Judge, Justice Simons, made a significant ruling in the case.

This ruling hinged on the fact that the Quinn children sued the bank, IBRC, on the basis that the bank had unduly influenced them; but when it came to running the case and giving evidence the case put forward appeared to be that it was Sean Quinn who was the culprit in point of undue influence and overbearing their minds, not IBRC, the defendant.

And last week the children applied to Court to change their statements of claim to reflect this and wished to file supplementary written statements.

Justice Simons, however, refused to grant orders along these lines. He also stated that the argument that their pleadings in the case that Sean Quinn had unduly influenced them were “untenable”. He also said that they

“were unequivocal in stating that the entity against whom the allegation of undue influence was being made was Anglo…Not only is no claim of undue influence made against Sean Quinn Snr in the pleadings, the making of any such claim would, in any event, be entirely inconsistent with the manner in which the litigation has been conducted to date.”

Justice Simons also stated that if Sean Quinn was the ‘guilty’ party in respect of undue influence he should have been named as a defendant. When he asked counsel for the Quinn children why statements along their present course of argument were not included in their original witness statements counsel for the Quinn children admitted there was ‘’no good reason’’.

Significantly Justice Simons decided that if he allowed this change in approach by the Quinn children it would cause prejudice to the defendant, IBRC, as it would not now know what case it was expected to meet.

Moreover, IBRC had a counterclaim against the Quinn children and was entitled to bring that case along without further delays, especially having regard for the fact that this case commenced in 2011.

This ruling, I suspect, was a game changer and prompted the settlement talks.

What I find fascinating about this case, however, is why the claims of undue influence alleged against Sean Quinn were not included in the original statement of claim of the Quinn children.

If you never knew anything about the law, or how legal proceedings are conducted generally, you would probably be raising your eyebrows at a claim of wrongdoing against one party for 8 years and then, when the case is being heard and evidence is being adduced, somebody else is being fingered as the culprit.

You might also raise your eyebrows a little further, I believe, if you knew that all parties in the case had legal professionals who were at the top of their profession and as good as ready money could instruct.

As an outsider looking in I find it fascinating that the case took the turn it has taken as I was looking forward to seeing the final judgment in a high stakes, high profile case. If settlement talks are successful we will never know, although I had my own strongly held opinion which shall remain unventilated.

UPDATE 3rd April, 2019

I held off publishing this post for a couple of days as settlement negotiations were ongoing between the parties. The outcome of those talks were that the Quinn children consented to judgments totaling €440 million being entered against them. This is €88,157,351 against each of them.

They also accepted that IBRC (formerly Anglo Irish Bank) had valid and enforceable claims on the Quinn assets which were the subject of the securities.

 

The Members’ Voluntary Liquidation of a Company

A company can be dissolved by liquidation and there are three categories of liquidation:

  1. A voluntary liquidation by the members after the making of a statutory declaration of solvency
  2. A voluntary liquidation by the members which is ratified by the company creditors
  3. A court ordered liquidation

In a voluntary liquidation the appointed liquidator must file accounts with the Companies Registration Office and the company is then dissolved 3 months after that.

Every invoice, letter, email or order for goods thereafter should indicate that the company is in liquidation.

Members voluntary winding up

The two main requirements for a members voluntary winding up include:

  1. A statutory declaration of solvency
  2. A special resolution must be submitted to the CRO (Companies Registration Office)

The Declaration of Solvency is made on form E1 which involves the directors declaring that they have enquired into the affairs of the company and are of the opinion that the company will be able to pay its debts in full within a period of 12 months from the commencement of the winding up.

Within 1 month/30 days of making this declaration of solvency the members must pass a special resolution to wind up and appoint a liquidator (form G1).

The resolution to wind up must be advertised in Iris Oifigiúil within 14 days of passing the resolution.

Forms E1, G1, and a Notice of Appointment of Liquidator (Form E2) must be filed with the Companies Registration Office.

The statutory basis for the Declaration of Solvency is set out in section 207 of the Companies Act 2014.

Procedure for commencement of a members’ voluntary winding up

Section 579 of the Companies act 2014 sets out the procedure for the commencement of a members’ voluntary winding up in Summary Approval Procedure, which requires a special resolution of the directors.

Alternatively, an ordinary resolution of the directors will be sufficient if the procedure under section 580 of the Companies act 2014 is adopted in respect of companies of fixed duration or a company which is to dissolve on the happening of a fixed event:

a) on the expiry of the period, if any, that is fixed for the duration of a company by its constitution; or

(b) should such happen, when the event occurs on the occurrence of which a company’s constitution provides that the company is to be dissolved;

a members’ voluntary winding up of the company may, alternatively to the employment of the Summary Approval Procedure for that purpose, be commenced in accordance with section 580.

In summary, three forms must be filed with the CRO (Companies Registration Office): E1, E2, and G1 and an advertisement must be placed in the Iris Oifigiúil publication.

A form E3 may be required if the liquidation is not completed within 12 months; E3 is a form in which the Liquidator gives an account of his acts and dealings.

3 months after the date of registration of the final accounts (forms E6 and E5), the company is deemed to be dissolved.

Under section 708 of the Companies Act 2014 a company’s dissolution can be voided within 2 years and returned to liquidation. This procedure involves an application to the High Court.

Qualifications for appointment as liquidator

The qualifications for appointment as a liquidator are set out in section 633 Companies act 2014 and there are 5 categories of individual who qualify.

Eligible individuals include practicing solicitors, members of prescribed accountancy bodies, a person with practical experience of winding ups and knowledge of the law, members of a professional body recognised by the Supervisory Authority, and a person qualified under the laws of another EEA state.

The liquidator will need professional indemnity cover and certain persons are disqualified from acting as liquidator-for example, the company auditor, or an officer or employee of the company.

Section 583 of the Act provides that the company can appoint the liquidator at a general meeting. A general meeting can also remove or replace the liquidator.

Declaration of Solvency

The declaration of solvency form (E1) must be completed correctly and it is vitally important to check it carefully before submitting it to the CRO; if not directions from the High Court will be required.

It also must contain an Independent Person’s report in accordance with section 580(4) of the Companies act 2014  which confirms that the Declaration of Solvency is not unreasonable.

The Independent Person’s report must contain certain prescribed information such as the scope of the work performed by the statutory auditor and the opinion of the statutory auditor that the declaration of solvency is not unreasonable.

A Licence to Use Photographs

licence to use photographs
Licence to use photographs

Are you a photographer? Do you need a licence to use your photographs?

I can supply you with a licence agreement to use your photographs.

The licence contains the following sections:

  1. Background
  2. Parties
  3. Definitions
  4. Duration of the licence agreement
  5. The grant of the licence-for example, is it exclusive, non-exclusive, transferable, use etc.
  6. The licensee’s obligations
  7. The licensor’s obligations
  8. The moral rights
  9. Fees
  10. Royalties
  11. Limits on liability
  12. Warranties of licensor
  13. Indemnity of licensor
  14. Equitable relief
  15. Entire agreement clause
  16. Force majeure
  17. Termination
  18. General
  19. Dispute resolution
  20. Governing law and jurisdiction
  21. A schedule of the photographic works

Use the contact form to make an enquiry.

A Company Director or Shareholder Cannot Represent the Company in Court

company representation 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:

  1. The parties in a case
  2. A solicitor instructed by a party in the case
  3. 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

gdpr legal actions

 

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.

Further reading:

The General Data Protection Regulation (GDPR) in Ireland-the Essentials

Data Protection Breaches-Are You Entitled to Damages?