Further to issues at the Longboat Quay complex in Dublin, where apartment owners may be forced to evacuate because the complex has failed to meet fire safety standards, a commenter asked:

“Could the directors of the development company (Gendsong Limited) not be guilty of fraud in respect of the construction and/or certification of Longboat Quay apartments, now exposed as being in breach of the Fire Safety Regulations?”

We asked Legal Coffee Drinker what’s it’s all about?

Too busy for a ‘chat’, LCD penned the following:

Under company law, a company is regarded as separate from its directors and shareholders. That means that, normally, its directors are not liable for wrongs committed by the company or its agents. The company itself can be sued, but if it’s broke, that means that it has no money to pay in compensation. The fact that Gendsong Limited is now in receivership makes it unlikely that it has substantial assets.

There are however exceptional cases in which a director can be held liable for the debts of a company, or sued for damages as a result of actions committed by it.

The first of these is under Section 610 of the Companies Act 2014 (previously contained in the Companies Act 1990). This provides that a receiver, or liquidator, or creditor, may bring proceedings in the High Court against a director or former director of a company which is in the course of being wound up, where it appears that that person was, while a director of the company, knowingly a party to the carrying on of any business of the company in a reckless manner, or with intent to defraud creditors, or for any fraudulent purpose. If they succeed, the director will be held personally liable for the debts of the company.

In addition, Section 818 of the Companies Act 2014 (also previously contained in the Companies Act 1990) provides that the Director of Corporate Enforcement, a liquidator or a receiver of an insolvent company may apply to the High Court to have its directors restricted from acting as company director unless the company in respect of which they are director has a substantial amount of financing. If granted, the restriction normally lasts for a period of 5 years.

Also, there is authority [Invertec Ltd v De Mol Holding BV and Another [2009] EWHC 2471 (Ch)] that a director may be held liable at common law for fraudulent misrepresentations made by them on behalf of the company. This is English authority but there appears no reason why it would not be followed in Ireland, although it applies in exceptional cases only.

Gendsong is now in receivership and it would be interesting to know whether or not the receiver, or the Director of Corporate Enforcement, have applied or are contemplating applying for a restriction order against its directors.

It would be also interesting to know whether there are any plans to put Gendsong into liquidation, so as to raise the possibility of an application for a restriction order. A resident, who has obtained a judgment against the company, would be deemed its creditor for the purposes of company law, and as such would be entitled both to have the company, if insolvent, liquidated and subsequently bring a claim to have the directors held personally liable for its debts in circumstances of reckless or fraudulent trading as defined above.

It’s possible that directors of Gendsong may seek to claim they relied on the architect who designed and certified the development. The question of course is whether it was reasonable for them to so rely or if they knew, or should have known, that the Fire Safety Certificate provided was wrong.

The residents may also have an action against the architect in negligence. Whether or not it is worth taking such a case depends on his assets and whether or not he is covered by insurance. Complaints may also be made to the professional bodies in the countries in which he carries on business, with a view to have him excluded from practice in those countries.

Earlier: Different Strokes Different Volks

Previously: How Many More Longboats

(RollingNews.ie)

As you may have heard the vote on the amendment of the Constitution to widen the definition of marriage, to include marriages contracted by members of the same sex will take place this Friday.

So what has that got to do with those posters?

We asked Legal Coffee Drinker what’s it all about.

Broadsheet: “Legal Coffee Drinker, what’s it all about?”

Legal Coffee Drinker: “Gay people will be able to legally marry. They will also be able to avail of all the benefits of being married, including tax relief, inheritance provisions, and, of course divorce and separation.”

Broadsheet: “But what about all the posters of sad children”

LCD: “Although gay couples can’t currently adopt as a couple, it is possible already for either of them to adopt as single persons. And in fact, independently of the referendum, the law has already been changed to allow gay couple adoption.
The Children and Family Relationship Act 2015, signed by the President on April 6 last, provides that cohabiting couples and those in civil partnerships have full adoption rights in the same way as married couples. It’s just awaiting a ministerial order to come into effect.”

Broadsheet: “And surrogacy, another source of concern from the no side?”

LCD [inserts Lungo Grand Cru Nespresso capsule]: “The surrogacy rules are the same for everyone at present. The child is deemed to be the child of the surrogate mother, and has to be adopted before it can become the child of the parents engaging the surrogate.

Broadsheet: “At present?”

LCD: “[Health] Minister [Leo] Varadkar has proposed a change in the law on surrogacy, which would involve the surrogate giving up her rights to the child, but it hasn’t yet been put in statutory form. If the legislation on adoption doesn’t distinguish between married couples and civil partners, it’s unlikely that the new surrogacy legislation will either.”

Broadsheet: “Why are  the no side saying ‘goodbye mammy’?

LCD: [pause] “Because they either haven’t bothered to look up the law or they are trying to mislead people.”

Broadsheet; “So Gay couples may be able to have a child through surrogacy and this angers them?”

LCD: “Yes but the operative word is ‘may’. The surrogacy rules are the same for both straight and gay couples at the moment there is no indication that Varadkar’s new surrogacy proposals will dsicriminate either. You don’t need a referendum for gay couples to have kids through surrogacy.”

Broadsheet: “So even if the referendum is not carried by the yes side gay couples who are civil partnered may be able to have a child through surrogacy?”

LCD: “Yes though if the referendum is not passed I suppose the government might say well we won’t bother with gay couples.”

Broadsheet: “Hence the posters?”

LCD: [drains coffee] “Yes.”

(Sasko Lazarov/Photocall Ireland)

Adrian Hardiman (top) and the judges of the Supreme Court, back row, from left: Peter Charleton, Mary Laffoy, Liam McKechnie, John MacMenamin, Frank Clarke and Elizabeth Dunne; and front row, from left: Adrian Hardiman, Nicholas Kearns, Susan Denham,  John Murray and Donal O’Donnell

A landmark Supreme Court decision [Director of Public Prosecutions v JC] delivered yesterday may give Gardai “effective immunity from judicial oversight”.

What on earth is it all about?

We asked Legal Coffee Drinker.

Broadsheet: “Legal Coffee Drinker, what’s it all about?

Legal Coffee Drinker: “It’s an appeal, brought by the Director of Public Prosecutions (the DPP) against the acquittal of a Mr JC (JC) for burglary on the basis that that the crucial evidence against him (his confession) was obtained as a result of a breach of constitutional rights and inadmissible.”

Broadsheet: “That sounds a bit rum.”

LCD: “The Supreme Court took the view that the trial judge had got it wrong in finding JC’s confession inadmissible and that it should have been admitted even though obtained in breach of constitutional rights. This was a big change from the position previously taken by the Supreme Court, which was that evidence obtained as breach of constitutional rights was inadmissible except in extraordinary excusing circumstances. The appeal against JC’s acquittal was allowed. Whether or not he’ll be retried is to be decided later.”

Broadsheet: “How exactly was the confession obtained?”

LCD: {pause] “There’s the thing. The confession was made by JC after he was arrested by the police in a house. The police had gained entry to the house by using a warrant issued under legislation subsequently found unconstitutional. This finding of unconstitutionality had retrospective effect, making the warrant invalid. The argument made at JC’s trial was that, because the initial entry leading to arrest had been as a result of an invalid warrant, everything obtained as a result of that warrant, including the confession, was invalid and should be excluded.”

Broadsheet: “But did they actually need the warrant in the first place? Isn’t there a general common law right to enter a house to arrest or somesuch?”

LCD: [drains coffee] “Yes, there is. And in fact the argument was made that, because of this, the confession wasn’t obtained as a result of an unconstitutionality, because it could have been obtained lawfully under the common law right of entry to arrest. However, it was felt that, because the Gardai had relied on the invalid warrant, rather than the common law right, the entry must be deemed unconstitutional.

Broadsheet: “Not the most glaring case of evidence obtained as a result of a breach of constitutional rights, in all fairness?”

LCD: “Maybe that’s one of the things which encouraged the majority of the Court to depart from previous law. There’s a saying that ‘hard cases make bad law’…”

Broadsheet: “And the ‘bad law’ made in this case?”

LCD: “Well, how ‘bad’ or ‘good’ it is remains to be seen, but it’s certainly an extremely significant change. The old law as laid down in the cases of The People v O’Brien [1965] IR 142 and DPP v Kenny [1990] 2 IR 110 was that evidence obtained as a result of a breach of constitutional rights was inadmissible except in extraordinary excusing circumstances. The majority in O’Brien did refer to this as applying only in relation to ‘deliberate and conscious’ breach, which caused some confusion. Kenny clarified matters by defining ‘deliberate and conscious’ breach very broadly so as to include unconstitutionalities resulting from a result of a deliberate and conscious act irrespective of whether or not the person breaching it had knowledge that the act was unconstitutional.”

Broadsheet: “Ignorance is no defence.”

LCD: “Ignorantia juris non excusat.”

Broadsheet: “Easy for you to say!”

LCD: [tops up cup] “But it seems that under the new law, as laid down by Clarke J in his judgment (O’Donnell J also delivered a majority judgment, overruling the old law, but left the exact definition of the new law to Clarke J), this is no longer the case, and that evidence obtained as a result of an inadvertent breach of constitutional rights will be admissible.
However, proving inadvertence is not going to be as easy as the officer concerned simply saying “I didn’t know”; According to Clarke J, a decision as to inadvertence requires an analysis of the conduct or state of mind not only of the individual who gathered the evidence but also any other senior official or officials within the investigating or enforcement authority concerned who is involved either in that decision or in decisions of that type generally or in putting in place policies concerning evidence gathering of the type concerned. Also, evidence obtained or gathered in circumstances where it could not have been constitutionally obtained or gathered should not be admissible even where inadvertence is present.”

Broadsheet: “There are more than two judges on the Supreme Court, right? Did they all agree with the views of O’Donnell and Clarke?”

LCD: “No. There was a very impassioned dissenting judgment delivered by Hardiman J. There was also dissenting judgments delivered by Murray J and McKechnie J. However they were outvoted by a majority of four to three (Clarke J, O’Donnell J, McMenamin J and Denham J comprising the majority).
There’s a considerable difference in attitude between the majority and minority regarding the balancing of interests in the criminal process. O’Donnell J began his judgment by referring to the importance of the criminal investigation process, and that the rules of evidence should not be used to frustrate the process of crime prevention. Hardiman J, on the other hand, referred to the concept of the individual’s right to a fair trial, and the risk to the rights of the individual posed if unconstitutionally obtained evidence was admitted. Although both the majority and the minority came up with manifold reasons for their various conclusions, it appears that this basic difference in attitude coloured their approach to the law they were interpreting.”

Broadsheet: “What ramifications will the JC decision have?”

LCD: “Well, in one sense it shouldn’t lead to a different approach to crime investigation, since it only covers inadvertent breaches. A lot will depend however on how ‘inadvertence’ is interpreted in practice by trial judges. If a lax approach to this term is taken, then there will be a lax approach to possible breaches of constitutional rights in the investigatory process. In addition, the decision is likely to result in more attempts by the prosecution, in criminal trials, to get in evidence which would otherwise have been excluded.”

Broadsheet: “Anything else?”

LCD: “Yes. Two things. Firstly, it’s interesting that this decision was given just over a year after disclosure of possible bugging of conversations in garda stations. In a previous post questions were raised about the extent to which this could affect criminal convictions, by reason of making the detainee’s custody unlawful and any confession subsequently made by him inadmissible under the principles in O’Brien and Kenny. Because of the JC decision, it seems that this has become significantly less of a risk.”
The other interesting thing about the JC case is that its ramifications extend well beyond the criminal process. The majority approach, on its face, represents a backtracking from the view, previously endorsed by the Supreme Court, that the rights of the individual are paramount. Will it represent a more conservative approach to individual rights generally? We shall have to wait and see.”

Broadsheet: “Thank you Legal Coffee Drinker. That calls for a frappé.

LCD: “Excuse me?

Broadsheet: “We have some free vouchers. It’s a cold coffee with foam and interesting flav… ”

LCD: *click*

Supreme Court judge criticises ruling on evidence in trials (Ruadhán Mac Cormaic, Irish Times)

Previously: LCD Answers Your Garda Bugging Questions

(Sasko Lazarov/Photocall Ireland)

Head shop on South William Street, Dublin in 2010

Today the Court of Appeal in the Bederev case declared Section 2(2) of the Misuse of Drugs Act 1977 unconstitutional.

We asked Legal Coffee Drinker, what’s it all about?

Broadsheet: “Legal Coffee Drinker, what’s it all about?”

Legal Coffee Drinker: “Well, let’s start with Section 2(2). This is a section in the 1977 Act allowing the government to declare ‘any substance, product or preparation’ to be a controlled drug for the purposes of the Act.”

Broadsheet: [shuffles]”Like what substances?

LCD: “The Act simply says ‘any substance, product or preparation’, without defining it further. Judge Hogan, in the Court of Appeal, pointed out that this is so wide that alcohol or tobacco could be made a controlled substance by the government, if it so wishes.”

Broadsheet: “Coffee?”

LCD: [refills cup] “On the face of Section 2(2), yes, coffee could be made a controlled drug. If the government so wished.”

Broadsheet: “Let them try sez you.

LCD: “Yes.”

Broadsheet: [pause] “So…what are the consequences of making something a controlled drug?”

LCD: “Possession, manufacturing, importation or supply of the substance is restricted and may be (indeed, usually is) a criminal offence.”

Broadsheet: “Have many drugs been declared controlled under that section?

LCD: “Yes. Quite a few. You’ll see a list of the government ordersmade under Section 2(2) here. If you click on them, you’ll see the names of the substances declared controlled in each case. They include ecstasy, magic mushrooms, head shop drugs and new psychoactive drugs.”

Broadsheet: “And this has now been held unconstitutional?”

LCD: “Yes. Because giving the Government such an open-ended power to designate controlled substances breached the doctrine of the separation of powers contained in our Constitution. According to this doctrine, judicial power is exercised by the judiciary, executive power by the government and legislative (law making) power by the Oireachtas.

Put another way, laws should be passed by the legislature, not the government. When the legislature passes an Act giving a power to the government to supplement or fill in gaps in an Act, that power cannot be too wide, it must be defined in nature and there must be guidance in terms of principles and policies regarding its exercise.

According to the Court of Appeal, the power given to the Oireachtas to declare substances controlled drugs under Section 2(2) was too wide and not subject to control – it represented an abrogation of law making power to the executive and this was unconstitutional.”

Broadsheet: “And the consequences of Section 2(2) being held unconstitutional?”

LCD: “Well, until amending legislation takes effect, all the substances previously declared controlled substances under Section 2(2) are now legal.

Broadsheet: “All drugs?”

LCD: “All drugs prohibited under Section 2(2), they’re listed in the ministerial orders linked to above.”

Broadsheet: “But not heroin, cocaine, cannabis or LSD?”

LCD: “No, these are controlled drugs listed in the Schedule to the 1977 Act, they come under Section 2(1) which is still constitutional, not Section 2(2).”

Broadsheet: “And what about previous convictions under Section 2(2)?”

LCD: “An extremely interesting question. The courts are still grappling with the question of the retrospective effect of a finding of unconstitutionality on previous convictions.

The traditional view was that a finding that a piece of criminal legislation was unconstitutional did not automatically invalidate previous convictions under the legislation. The leading case is A v Governor of Arbour Hill Prison [2006] 4 I.R. 88; [2006] IESC 45, where an accused was convicted under a statutory provision (section 1(1) of the Criminal Law (Amendment) Act 1935 later found to be unconstitutional. [drains cup]. It was held that he could not rely on the subsequent finding of unconstitutionality as a ground for challenging his conviction, the Court of Criminal Appeal stating as follows:-

“In a criminal prosecution where the State relies in good faith on a statute in force at the time and the accused does not seek to impugn the bringing or conduct of the prosecution, on any grounds that may in law be open to him or her, including the constitutionality of the statute, before the case reaches finality, on appeal or otherwise, then the final decision in the case must be deemed to be and to remain lawful notwithstanding any subsequent ruling that the statute, or a provision of it, is unconstitutional. That is the general principle.”

There have however been some cases which indicate wider retrospective effect for a finding of unconstitutionality, but none dealing with the point exactly. Perhaps we will find out the answer when someone challenges their conviction under Section 2(2) on the basis of this case. In the meantime, there’s a good discussion of the issue by humanrights.ie here.”

Broadsheet: Thank you Legal Coffee Drinker. Extremely helpful. Some of the ‘sheeters were planning a gathering tonight if you fancy. For the legal loophole that’s in it.”

LCD: “No thanks.”

Broadsheet: “There’ll be coffee…constitution permitting.”

LCD: “No really..”

Broadsheet: ” Karl may go down the ‘k-hole’?

LCD: “What? No.”

Broadsheet: “Fair enough. Karl probably won’t go down the hole in anyway. Not entirely sure what it entails meself.”

LCD: *click*

Broadsheet: “Thanks Legal Coffee Drinker.”

Earlier: Everyone Stay Cool

Related: Varadkar: ‘Dozens’ of convictions in question after drug law ruling (Breakingnews)

 (James Horan/Photocall Ireland)

Gorse Hill, Vico Road, Killiney, Co Dublin

The struggle between the O’Donnell family and Bank of Ireland for control of Gorse Hill continues this afternoon.

But what about the legal case concerning the O’Donnell children, discretionary trusts and right of residence?

We asked Legal Coffee Drinker, what’s it all about.

Broadsheet: Legal Coffee Drinker, what’s it all about.”

Legal Coffee Drinker: “It’s about whether or not Bank of Ireland has authority to retake possession of Gorse Hill. Gorse Hill is a property registered in the name of Vico Limited (“Vico”) which executed a mortgage over the property in favour of Bank of Ireland in 1998. This mortgage contained the standard clauses providing that in the event of Vico being unable to meet its financial obligations there under, the Bank would be entitled to appoint a receiver to take possession of the property and sell it.
In subsequent High Court and Supreme Court proceedings the O’Donnell children, Blaise, Blake, Bruce and Alexandra, challenged the validity of the mortgage. They claimed that the mortgagor Vico had not owned Gorse Hill in its own right, but had held it under a discretionary for them and that the Bank was aware of this. Accordingly Vico was not entitled to mortgage the property without the children’s consent, nor could the Bank rely on the mortgage against them in circumstances where it had known of their rights when entering into the mortgage.”

Broadsheet: “What’s a discretionary trust?”

LCD: [pause} “A trust is where one person (a trustee) is the nominal owner of property for the benefit of someone else (a beneficiary). A discretionary trust arises where there are a number of beneficiaries, and the trustee has the discretion to divide the trust property between them as it sees fit, without any beneficiary being entitled to any or any specific share. No matter what type of trust is involved, the role of the trustee is to look after and manage the property for the benefit of the beneficiary. Their duty is to act in the interests of the beneficiary at all times.”

Broadsheet: “Can a trustee mortgage trust property?”

LCD: “A trustee may be able to mortgage trust property if the terms of the trust permit but only if this is in the best interests of the beneficiaries. Failure to comply with this requirement may be a breach of trust and may have consequences for the mortgagee if they are aware of it and become implicated in the breach.”

Broadsheet: “So if Gorse Hill was held on trust for the O’Donnell children this would have been a defence?”

LCD: “Possibly, depending on whether or not the mortgage was a breach of trust and the extent of the Bank’s knowledge of this fact. However both the High Court and the Supreme Court took the view, after hearing evidence and going through relevant documents, that Gorse Hill was in fact held by Vico Limited in its own right and did not form part of the trust for the O’Donnell children (the Avoca Trust). The children, through the Avoca trust, had an interest in the shares of Vico Limited, but because of the principle that shareholders in a company do not own that company’s property, they weren’t owners of Gorse Hill. Instead; the directors of Vico were free to deal with it as they liked. “

Broadsheet: “And what about the right of residence?”

LCD: [refills coffee] “The right of residence wasn’t discussed in the above decisions. From newspaper reports it seems to have been raised for the first time by Blake O’Donnell in court this week. He said that he and his brothers and sisters had granted a right of residence in Gorse Hill to their parents, by which the Bank was bound. The difficulty is that this doesn’t really makes sense given the earlier decisions. You can only give a right of residence in property you own. If, like the O’Donnell children, you don’t own a property, you can’t grant anyone else a right of residence over it.”

Broadsheet: “What is a right of residence anyway when it’s at home?”

LCD: [lengthy pause] “It’s a right to occupy premises for one’s life. What it is exactly depends on its terms. It could be a right to occupy a particular room, or to occupy premises generally. It could be an exclusive right of residence, so that no one else can occupy the room/property with you, or it could be non-exclusive, which allows other occupiers.”

Broadsheet: “Can it be got rid of?

LCD: “Either the owner of the property or the owner of the right of residence may apply to court to ask for the right to be converted into money form, so that the owner of the right vacates in return for a lump sum payment. It’s up to the court to decide if it wants to do this or not.”

Broadsheet: “So if Brian O’Donnell has a right of residence, he cannot be got rid of?”

LCD: “Not if it was validly created. But in order to be validly created a right of residence would have to be created by the owner of the property (Vico, or a previous owner). In addition, if it was created after the mortgage in favour of the Bank was entered into it would only be valid if the Bank consented to it.”

Broadsheet: “Thank you Legal Coffee Drinker. Nothing like a late afternoon legal pep talk.

LCD: “Right”

Broadsheet: “Like a neat espresso.”

LCD: “Sorry?”

Broadsheet: “Illegally strong…”

LCD: *click*

Broadsheet: “…coffee.”

Attorney General Marie Whelan (left) with Tanaiste Joan Burton

Government TDs this week voted down Clare Daly’s bill to allow abortion in cases of fatal fetal abnormalities claiming it was unconstitutional

But was it?

We asked Legal Coffee Drinker what it’s all about

Broadsheet: “Legal Coffee Drinker, What’s it all about?”

Legal Coffee Drinker: “It’s about Article 40.3.3 of the Constitution, which provides as follows:-

‘The State acknowledges the right to life of the unborn and, with due regard to the equal right to life of the mother, guarantees in its laws to respect, and, as far as practicable, by its laws to defend and vindicate that right.’

The Protection of Life in Pregnancy (Fatal Foetal Abnormalities) Bill 2013 provides that, in addition to the existing grounds for abortion set out in the Protection of Life During Pregnancy Act, it shall be lawful to carry out an abortion in the case of a fatal foetal abnormality, defined in Section 1 of the Act as “a medical condition suffered by a foetus such that it is incompatible with life outside the womb”.
The argument is that this is in breach of the foetus’s constitutional right to life. The reasoning goes that, on the wording of Section 40.3.3, the foetus’s life can only be justifiably ended where there is a threat to the life of the mother, which threat does not necessarily exist in the case of a foetus suffering from fatal foetal abnormality.”

Broadsheet: “Is this correct?”

LCD: “It’s a simplified reading of Section 40.3.3. A number of issues arise in relation to this section. Firstly, what is meant by ‘the right to life’ of the unborn, and does it apply, or apply to the same extent, where the unborn in question has no possibility of surviving outside the womb? Secondly, the obligation in relation to the right to life is an obligation to defend it ‘so far as practicable’.
Is it practicable to defend, to the same extent, the rights of a foetus with no viable possibility of life outside the womb?
Thirdly, although Section 40.3.3 might on its face indicate that the only thing which can limit the right to life of the unborn is the right to life of the mother, it is recognised that constitutional rights generally may be limited by other constitutional rights even where the Constitution does not expressly state this. The mother of a foetus with fatal foetal abnormality has other rights apart from the right to life, which may be infringed by the continuing of the pregnancy.”

Broadsheet: “A tricky one to call then?”

LCD: “Not quite as difficult as it was before the recent decision of P(P) v Health Service Executive [2014] IEHC 622. You might remember this recent case, in which a three-judge High Court permitted the withdrawal of life support from a woman, who was brain dead, and whose foetus had no viable prospect of survival outside the womb.
In this case, the Court took the view that such withdrawal of support would be a failure of the State’s obligation to vindicate the right to life of the foetus, stating that “the question which must be addressed is whether even if such measures are continued there is a realistic prospect that the child will be born alive,” concluding that “although the State has an interest in preserving life, this interest is not absolute in the sense that life must be preserved and prolonged at all costs no matter what the circumstances.”

Broadsheet: “But this case related to withdrawal of support rather than active steps to end life within the womb?”

LCD: “True. But the view of the court that the right to life was not absolute is significant, as is its explicit focus on the question of whether there is a realistic prospect of survival outside the womb, which seems to be a key factor in determining the weight to be given to its right to life. In circumstances where the unborn has no realistic prospect of survival, considerations relating to the welfare of mother, other than her right to life, may well fall to be taken into consideration.”

Broadsheet: “Can you say this for certain?”

LCD: [Drains coffee] “Absolutely not. But equally, and particularly following the P(C) decision, it is not possible to say with certainty, or even as a matter of probability, that the Bill is unconstitutional. Many Bills, including those put forward by governments, have constitutional question marks hanging over them. That this will happen is expressly recognised by the Constitution itself, Article 26 of which provides that the President, before signing a Bill, may refer it to the Supreme Court to have a decision taken as to its constitutionality.

To regard possible unconstitutionality, falling short of certainty, or even probability, as a ground for not voting for legislation would have ruled out much of the most important legislation passed in this jurisdiction. Constitutional rights – even the right to life of the unborn – are not absolute; nor, in this case, is the question of unconstitutionality. Indeed, it could be argued that, if anything, it is in the public interest that we get the opportunity to hear more, from the Supreme Court, on the meaning and scope of Article 40.3.3.”

Broadsheet: “So telling people not to vote for the Bill above on the basis that it ‘is’ unconstitutional, is not really correct?”

LCD: “Yes. The sole arbiter of unconstitutionality is the Courts. In cases where there are grounds, based on existing caselaw, for saying that legislation is definitely, or most likely, unconstitutional, a statement like the above might be justified. However where there is limited caselaw, and such as there in no way raising even a probability of unconstitutionality, such a statement rings a bit hollow, to say the least.”

Broadsheet: “Oh.”

LCD: “Yes.”

Broadsheet: “Or more like: Oooooh.”

LCD: “Are we done?”

Broadsheet: “We are . Most grateful. Thank you Legal Coffee Drinker so much.”

LCD: *click*

Previously: Sent Away

“I Could Not But Have Supported Clare Daly’s Bill”

Do you have a thorny legal issue but short on guineas? Send your brief ‘brief’ to Legal Coffee Drinker at broadsheet@broadsheet.ie.

[Retail Excellence of Ireland banners in 20102]

It was a landmark decision that  might have changed EVERYTHING in the world of shop renting in Dublin.

BUT earlier today the Supreme Court reversed the judgment in Ickendel Limited-v-Bewley’s Cafe  (forcing Bewleys to continue paying upwards of €1.46 million a year in rent).

We asked Legal Coffee Drinker, what’on earth is it all about.

Broadsheet: “Legal Coffee Drinker, what on earth is it all about?”

LCD: “Upwards only rent review clauses.”

Broadsheet: “What does that actually mean?”

LCD: “Most commercial leases provide for rent review every five years or so. If the lease pre-dates the 28th February 2010 – when the provisions of the Land and Conveyancing Law Reform Act 2009 modifying rent review clauses came into effect – most likely it also contains an upwards only rent review clause.”

Broadsheet: “How is it inserted in the lease agreement?”

LCD: The most common way is to provide in the reddendum (the section of the lease dealing with the rent), that the rent shall be a specified sum until the date of the rent review and after that the rent payable for the immediately preceding period or market rent as of the review date, whichever is the greater.
The effect of this is that even if rents generally go down, the landlord is guaranteed that the rent remain the highest rent previously payable under the Lease. In other words, the rent can only go upwards, never downwards, which is where the term ‘upwards only’ comes from.

Broadsheet: And what’s that got to do with the Ickendel Vs whatsit case?

LCD: “The reddendum in the Bewleys lease differs slightly from the standard form and the tenant was seeking to rely on this difference to argue that the lease was not a full ‘upwards-only’ lease. The tenant’s argument was that the effect of the clause was the rent could, in circumstances where market rents were declining, reduce from that payable on previous reviews so long as that reduction did not take it below the initial rent.
The reddendum in Bewleys reads as follows:-

“YIELDING AND PAYING therefor . . . . FIRST the clear YEARLY RENT of . . . [IR£168,000] and thereafter during each of the successive periods of five years of which the first shall begin on [1st January 1992] a rent …. equal to the greater of (a) the rent payable hereunder during the preceding period or (b) such revised rent as may from time to time be ascertained in accordance with the provisions in that behalf contained in Clause 6 hereof (whichever shall be the greater) . . “

Broadsheet: “How does this differ from the standard ‘upwards only’ provision?”

LCD: Well, the difference is in the highlighted portion (a) above ‘the rent payable hereunder during the preceding period’. The standard reddendum normally reads ‘the rent payable hereunder during the immediately preceding period’.

Broadsheet: “Um.”

LCD: “Bewleys argued that, in the absence of the prior word ‘immediately’, the words ‘the preceding period’ were ambiguous and could be read as either (i) the first five year period of the lease or (ii) the particular five year period immediately preceding the review. They also argued that, where there was ambiguity in a lease, the lease should be given a fair commercial interpretation, which, in a context of declining rents, favoured the upwards only element being interpreted narrowly i.e. (i) rather than (ii). This was accepted by Charleton J in the High Court.
The Supreme Court accepted that the interpretative principles applied by Charleton J were correct. In other words, he was right to look first to see if there was ambiguity, and that he was right, if there was ambiguity, to interpret the upwards only element narrowly.”

Broadsheet: “So what’s the problem with the …”

LCD: “…However [pause] they differed with him on his application of the law to the facts, in that they felt that the terms of the reddendum set out above were unambiguous. Even though the word ‘immediately’ did not expressly appear before the words ‘preceding period’, it was implicit from the terms of the clause, read as a whole. ‘Period’ in the portion highlighted in black above, must necessarily refer back to the words ‘successive periods of five years’ referenced in the clause rather than the initial period of five years during which the initial rent of £168,000 was payable.”

Broadsheet: “Do you agree with the Supreme Court?”

LCD: [refills coffee] As a matter of contract law, yes. I think if you read the reddendum as a whole, there is no ambiguity, for the reasons set out by them above. As a matter of justice – the operation of upwards-only rent review clauses can be extremely unfair, from a practical point of view, in a situation of rental collapse, especially where there is a long period of time left to run on the lease so that the tenant cannot simply walk away from it.

Broadsheet; “What should the Supreme Court apply, law or justice?”

LCD: “I think the job of the courts is to apply the law of contract except where that law clearly violates human rights or the Constitution. There was no human rights or constitutional challenge in this case. Nor was there any argument that the combination of rental collapse and the upwards only rent review provision frustrated the lease.”

Broadsheet: “Will this issue continue to arise again in the future?”

LCD: “Yes. There are a lot of pre-2010 leases around which contain upwards-only rent review clauses.”

Broadsheet: “Can the legislature change the law so as to limit the upwards only effect of these clauses?”

LCD: “Yes, subject to this not being unconstitutional or in breach of human rights.”

Broadsheet: “Can the tenant walk away from these leases?”

LCD: “No. Not unless there is a break clause, or unless the frustration argument outlined above succeeds.”

Broadsheet: “Could the leases be held to be frustrated?”

LCD: “Unlikely, according to the law of contractual frustration as it stands (very narrow view of frustration), but not absolutely impossible.”

Broadsheet: “What happens if the tenant walks away anyway?”

LCD: “An interesting question.”

Broadsheet: “I was saving it. Thanks.”

LCD: [Drains cup]: The landlord could in theory continue suing the tenant for the rent even after they have vacated. However there is also the question of whether or not the landlord is under a duty to minimise their loss by finding a new tenant, albeit at a reduced rent, and sue the tenant for the difference. UK law has held that a landlord is not under an obligation to do this, but the position in Ireland is unclear. If the Irish courts were to find such a duty to be present, it would limit the tenant’s liability to the difference between the market rent and the rent payable under the upwards only clause.”

Broadsheet: “Are we likely to find out the answer to this?”

LCD: “Yes. In many cases, tenants are walking away and coming to a settlement with the landlord – primarily because the tenant’s financial position is not secure enough for the landlord to be certain that they are a good ‘mark’ for the higher rent for the duration of the lease. When landlords are faced with a very financially secure tenant, however, they are unlikely to let them out of an upwards only lease. In such case, it might be worth the tenant’s while taking a legal challenge on one of the points above – constitutionality, frustration or duty to minimise. Whether any of these will succeed is another question…”

Broadsheet: “In the meantime Bewley’s will need to sell a lot more cups of Joe.”

LCD: “Right.”

Broadsheet: “Raise the price on their sticky buns while they’re at it eh?”

LCD: “Are we done?”

Broadsheet: “Thank you very much Legal Coffee Drinker. You’re like a jolt of Nespresso.”

LCD: “Goodbye.”

Previously: Onwards Not Upwards

Earlier: The Best Small Country In The World In Which To Do Business

[The new restrictions on texting while driving.]

Via Boards.ie contributor Ironclaw:

“I’m not a solicitor, but ‘between mobile or fixed numbers assigned in accordance with national numbering plans’ wouldn’t cover the likes of iMessage where contacts can be defined by email addresses and not phone numbers.
By my reading, its not an offence to use a GPS or touch the screen for other purposes. In fact, the only offence seems to be messaging (SMS, Text and Email) But I doubt any Garda will listen to you because its frankly impossible to tell from a distance what someone is doing on their phone.”

Legal Coffee Drinker has been alerted.

Meanwhile, anyone?

New Penalties For Texting While Driving Comes Into Force (RTE)

Thanks Conor