Categories
Business and Company Law

Liquidator Refused Access by High Court to Company’s Gmail Account

The liquidator of a Dublin company, with debts of over €600,000, has been refused access by the High Court to the Gmail account of the company.

The company had one director and shareholder, Mr Jawad Khan, who told the liquidator that all the business of the company was conducted through this free Gmail account. He gave log in details to the liquidator but the liquidator was unable to gain access.

The liquidator also discovered at some point that UK authorities were investigating the use of criminal property to purchase vehicles for the company.

The liquidator contacted Google and told Google that he believed the account had been used for fraudulent activity and there may have been an attempt to conceal evidence through this account. He wanted Google to give him full access to the account.

Google refused on the grounds of its obligations to afford privacy rights to its users. Google also asserted the liquidator had failed to provide any or sufficient evidence that the company records or books were contained in the Gmail account. It told the liquidator it should seek a Norwich Pharmacal Order from the High Court which would direct Google to provide the subscriber information associated with the account.

High Court

The High Court pointed out that the High Court could only use its discretionary powers against a contributor, trustee, receiver, banker, agent, or officer of the company in question. in order to succeed the High Court said that Google would have to be found in one of these groups.

The High Court also held that there was no implied right to force the Court to order Google give access to the account. Moreover, even if there was such a right the High Court held that the liquidator had failed to put forward evidence that the Gmail account contained books or records of the company.

That is, the liquidator had failed to adduce evidence that the company had an intellectual property right in any of the content of the Gmail account in question.

Takeaways

  1. Would an application for a Norwich Pharmacal order have succeeded?
  2. The barriers facing liquidators appear to be significant if company information and affairs are to be found in personal email accounts of directors or officers of the company
  3. Google takes privacy and data protection seriously

Read the full decision here SJK Wholesale Limited (In Liquidation) v Companies Act 2014 [2020] IEHC 196.

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.

Categories
Business and Company Law

Commercial Leases and the COVID-19/Coronavirus-the Fallout for Small Business Owners

rent-review-commercial leases

I was contacted last week by a couple of clients whose business has gone through the floor or evaporated entirely as a consequence of COVID-19.

One of the first concerns they had was the difficulty they were inevitably going to encounter in trying to continue to pay the rent on their commercial premises. Here are some questions that spring to mind.

Must I keep paying rent?

It is almost certain that there would be no entitlement to cease paying rent. From a legal perspective the lease will contain an obligation to pay rent and you will be in breach of that covenant if you fail or refuse to do so.

If you did stop, you are leaving yourself open to the landlord taking matters further. Courses of action open to her would include commencing legal proceedings to recover the arrears and/or to forfeit the lease and recover possession of the premises. If you had paid a rent deposit this would obviously at risk and if there was a guarantee for the rent, the guarantor could expect to hear from the landlord who will try to enforce his guarantee.

Can I terminate the lease or just hand it back?

No, you could only do so with the consent of the landlord. This assumes that there is no break clause option in the lease.

Fundamentally, once you enlist you must soldier-that is to say, when you signed up to the lease you signed up to various terms and conditions and covenants and it is unlikely that the COVID-19 catastrophe will allow you to walk away from those obligations.

A force majeure event may allow this to happen, but COVID-19 is almost certainly not going to be held to be such an event.

Can I claim off my insurance policy?

You need to review the terms and cover provided by your policy. It may be possible to claim for losses arising from COVID-19 but, quite frankly, when you are scouring through an insurance policy looking for a term or condition to favour you it will probably be a futile exercise.

Can the landlord close my premises?

This is a tricky one and will depend on the premises and where it is located. If, for example, the premises were in a shopping centre and the landlord decided to close the whole centre you may be able to argue that the landlord has torn up the lease.

You would have a harder time with that argument, however, if the landlord was following directions of the government or medical advice.

Can I suspend payment of rent?

There may be provision in the lease for the suspension of rent, but this is likely to apply if the building was destroyed or damaged by lightning or some such similar catastrophe. Otherwise it is unlikely that the normal rent suspension provisions which might be found in a commercial lease would apply.

The bottom line

The terms, covenants, and conditions in your commercial lease apply from day 1 and even though COVID-19 is an appalling vista for any small business owner the law will not come to your rescue and you are stuck with the provisions of the lease. You are reliant on the generosity, decency, and common sense of your landlord.