There is a complete desert of information on the issue of the auditing of Anglo Irish Bank by Ernst & Young.

The first pertinent question to ask is, who were the accountants, as opposed to the auditors? Were Ernst & Young also the accountants?

The standard of care for an auditor is, almost invariably, that of the reasonably careful member of his profession. In short, just like a medical practitioner, the auditor is judged by the standards of practice among his peers.

There is a difference; the procedures to be followed by auditors are, in a sense, codified in accounting standards. Even where an accounting standard is not to be observed as a legal requirement, a failure to follow it is strong evidence of negligence. A court will not require proof by evidence of an expert on such a matter, just proof of the facts. Of course the plaintiff will still have to prove the loss flowed from the breach.

An auditor is entitled to rely on the internal controls in a company, particularly a large one. This is the reason why the identity of the accountant is important; if the internal controls were deficient Ernst & Young would have difficulty in relying on them if they established them or failed to implement them.

An auditor is entitled to rely on the assurances from management about the accounts. Nevertheless, an audit has to be planned and the plan has to take into account that the assurances from the management may be false. Therefore the auditor should consider where and how corroboration of information can be obtained.

In the case of Anglo Irish Bank, if IFSRA knew of the large Fitzpatrick loans for years, why did Ernst & Young not know of them? We know for sure that the loans were not reflected in the annual accounts and the accounts are required by law to show a true and fair picture of the state of the company’s accounts; that is precisely the averment required of an auditor in signing off on the accounts.

So, did Ernst & Young know of the loans and if they did not, why did they not? What added information did IFSRA have that Ernst & Young did not have?

Or, if IFSRA got the information, why did Ernst & Young not look to IFSRA on a regular basis to cross check what IFSRA knew with what Ernst & Young believed to be the case?

Most people who buy a motor car conform to the definition of “consumer” in the Sale of Goods and Supply of Services Act 1980.

3.—(1) In the Act of 1893 and this Act, a party to a contract is said to deal as consumer in relation to another party if—

( a ) he neither makes the contract in the course of a business nor holds himself out as doing so, and

( b ) the other party does make the contract in the course of a business, and

( c ) the goods or services supplied under or in pursuance of the contract are of a type ordinarily supplied for private use or consumption.”

A large number of those consumers buy their car on “Hire Purchase” or “Credit Finance”from a Finance Company.

Provision is made in the Consumer Credit Act 1995 for such purchases.

By Section 76 (2) of the Consumer Credit Act 1995, the following are terms of hire purchase agreements with consumers:

a. That the goods are of merchantable quality;

b. That the goods are reasonably fit for the purpose for which the consumer required them, (In the case of a motor car, to provide reliable, durable, defect-free motoriing to the consumer);

c. That the goods should be of satisfactory quality;

Section 76 reads in part:

(2) Where the owner lets goods under a hire-purchase agreement in the course of a business, there is an implied condition that the goods are of merchantable quality within the meaning of section 14 (3) of the Sale of Goods Act, 1893, except that there shall be no such condition—

( a ) as regards defects specifically drawn to the hirer’s attention before the agreement is made, or

( b ) if the hirer examines the goods before the agreement is made, as regards defects which that examination ought to have revealed.

(3) Where the owner lets goods under a hire-purchase agreement in the course of a business and the hirer, expressly or by implication, makes known to the owner or the person by whom any antecedent negotiations are conducted, any particular purpose for which the goods are being hired, there shall be an implied condition that the goods supplied under the agreement are reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied, except where the circumstances show that the hirer does not rely, or that it is unreasonable for him to rely, on the skill or judgment of the owner or that person.

(4) An implied condition or warranty as to quality or fitness for a particular purpose may be annexed to a hire-purchase agreement by usage.”

By Section 80 of the Consumer Credit Act 1995 representations made by the salesman selling the car are deemed to be representations made by or on behalf of the Finance Company.

Section 80 reads:

80.—Where goods are let under a hire-purchase agreement to a hirer, the person, if any, by whom the antecedent negotiations were conducted shall be deemed to be a party to the agreement and that person and the owner shall, jointly and severally, be answerable to the hirer for breach of the agreement and for any misrepresentations made by that person with respect to the goods in the course of the antecedent negotiations.”

No provision has been made under the Consumer Credit Act 1995 for the determination of disputes under the Finance agreement to be by Arbitration, whereas the standard Society of Irish Motor Industry (“SIMI”) form of agreement does contain an arbitration clause.

Consequently, disputes under Credit Finance Agreements are, in principle, resolvable in litigation. The consumer is not obliged to go to arbitration.

The consumer has a choice of suing the Finance Company and the motor dealer who “sold” the car to the consumer or just the Finance Company.

What to do after an accident at work:-

1. If you are injured at work, it is extremely likely that your employer is responsible for the accident. It is one of the duties of your employer that he/she provide you with a safe place of work.

2. The employer’s duty is a general one and, usually, a specific one. If the employer is negligent and you are injured as a consequence, the employer is liable. In addition there are statutory obligations laid on employers, some of which are precisely directed at making specific workplaces safe. The employer must instruct a worker in the techniques of lifting, for instance. Loads must not exceed certain weights. If the employee is injured while lifting a load at work the context in which that happened may indicate the employer is liable.

3. These breaches of statutory duty can occur without the employer being negligent. There is no difference in outcome between a verdict (and compensation) for a worker for injury following breach of statutory duty and injury following the employer’s negligence.

4. As soon as possible after the accident, document it. In short record the facts; photograph the scene; write an account of the accident. Have the witnesses write an account of what they saw. Preserve physical objects if they are relevant.

5. You should take account of the fact that what seems a small injury may turn out to be serious in the long term. It is wiser to treat all injuries at work as serious and act accordingly. If the injury is minor you can, if you wish, discontinue any further action. If it is not minor you will have taken the correct steps and will not be handicapped in bringing your claim.

6. Practically every employer will have insurance cover to meet injury claims. It is a benefit to the employer to have notice from the employee of the employee’s injury and claim so that the employer may inform the insurance company. Furthermore, it is, effectively, necessary under statute that the employee notify the employer in writing within two months of the accident.

7. In addition, time will normally promptly begin to run against the injured worker to issue proceedings in court. The limitation period for such actions is currently two years. Actions commenced after the expiration of the time are inevitably going to be struck out without a trial or payment of compensation.

8. Plaintiffs suffering personal injury (other than arising from a health care situation) must apply to the Personal Injuries Assessment Board before they are permitted to issue proceedings in court. When they apply to PIAB and receive an acknowledgment from PIAB of the application, the statute of limitation time of two years is suspended while PIAB is considering the application. However, in due course the time will commence running again.

9. An injured worker needs a solicitor for the PIAB process and the court proceedings.

10. PIAB makes no judgement on the liability issue; just the quantum issue. If the employer or the insurance company wish to challenge the alleged circumstances of the accident, the case will emerge out of the PIAB system for that reason. It is essential to be prepared for that in doing the documentation of the accident.

11. Full documentation will usually involve the making of an assessment and report by a forensic engineer. The report will be preceded by a visit to the accident scene. The plaintiff’s documentation will be invaluable; accident scenes often change.

12. The plaintiff’s solicitor hires the forensic engineer.

13. After an exchange of pleadings and an exchange of medical reports, if the case does not settle by negotiation, the parties will clash at trial. Even cases that reach this stage normally settle “at the door of the court”. If the case does not settle, that is not a problem; litigation is really about the trial. The trial process is the governing idea over everything that went before. It is essential to have lawyers who are confident in the management of the trial process. (This is not to imply that it is fully controllable; sometimes witnesses do not furnish the expected answer to the question put to them).

14. In the light of that, the management of a claim is about the management of risk. Even a very poorly documented claim is a risk for the defendant; it is the job of the defendant’s lawyer to deal with the risk (subject to instructions) and buy it off on the best available terms.

It is highly speculative, but an attractive thought, that the Zeitgeist of the early twentieth century produced or induced two events; the development of the modern law of Negligence and the perversion of truth by the Piltdown Man hoax.

They are connected in one respect; a lawyer was at the centre of each event.

Lord Atkin, in the House of Lords, delivered the seminal judgement in Donoghue v Stevenson, and Charles Dawson, a solicitor, “found” the skull of Piltdown Man in an English gravel pit.

Mr. Dawson was a very respectable person, as witnessed by the fact that after his find of Piltdown Man, (officially named “Eoanthropus dawsoni”) critics of the claim that his find were the remains of an early human, were attacked in personal terms.

He allegedly found the remains in 1912. As late as 1938 a memorial was erected at the gravel pit in these terms;

Here in the old river gravel Mr Charles Dawson, FSA found the fossil skull of Piltdown Man, 1912-1913, The discovery was described by Mr Charles Dawson and Sir Arthur Smith Woodward in the Quarterly Journal of the Geological Society 1913-15.”

The memorial was, probably, a desperate last stand of the respectable people. The hoax was fully exposed in 1953 in, inter alia, the “Times”; but the truth had been available since 1923.

Arguably, it is too soon to make a comment on the Ango Irish Bank debacle. But this post is a comment and is timely, so the argument tips to comment, rather than no comment. A newspaper suggestion that the Irish Financial Services RegulatorY Authority (“IFSRA”) had actual knowledge of Sean Fitzpatrick’s loans, and their size, for years, shows that the situation may develop at considerable speed, justifying a torrent of comment now and not later.

Undoubtedly, the timely moment for full assessment must surely lie with the occasion that the Office of Director of Corporate Enforcement (“ODCE”) issues a report of some kind. The public and the shareholders need that; currently, too much is unknown.

The Irish Times reports

A DUBLIN solicitor has said it is a “racing certainty” that shareholders will be taking a case for damages arising from what has happened with Anglo Irish Bank.

My solicitor colleagues who are consulting counsel are to be commended for their spirit, but counsel are not a source of evidence, just opinion, and what we lack is not opinion but evidence. There is, of course, the small matter of the need to avoid making defamatory statements; so any comment cannot be full.

What we know is that a sense of grievance in shareholders is not, itself, a spur to action. After all, if the sense of grievance springs from the loss in value of the Anglo Irish Bank shares, it has a weak foundation. Did they not know of the Anglo Irish Bank “business model”? Is it not the failure of that model that has caused the major part of the shareholder loss?

There is a good argument to excuse the shareholders; it is, surely, a legal and business fiction that shareholders know what they are doing? It is equally a fiction that it is open to them to effectively protect themselves (other than by selling their shares)?

That reflection suggests the principal ground for any useful legal action (from a shareholder viewpoint; there are other viewpoints). The only useful “entitlement” of an Anglo Irish Bank shareholder was the right to full disclosure of the way in which Anglo Irish Bank was being managed. Anything less placed the shareholders in the category of “outsiders” as opposed to “insiders”. There is no evidence, or insufficient evidence, on that topic currently. That is the kind of information that an investigation will look at (but will it?) and we should turn our eyes to the ODCE rather than to the Law Library for that information.

What counsel can currently tell us (well, some of them anyway), is that on the available information, Anglo Irish Bank Corporation is the obvious plaintiff for any contemplated proceedings against the Bank’s directors. Under the rule in Foss v Harbottle (1843), a shareholder is not entitled to litigate, save by derivative action, a wrong done to a company. A derivative action is possible only where the shareholder can prove a fraud.

(Before I am assailed with suggestions on this topic, consider the question of reliefs; what is the point, say, of seeking a winding up order against Anglo Irish Bank Corporation?)

So, is there any hurry? Not really; the Statute of Limitations is indulgent (relative to plaintiffs suffering personal injury) to aggrieved shareholders.

What might be useful currently is the formation of a network of support by shareholders.

By the same token the directors will, presumably, form an equivalent network of support among themselves. (On current information a cool headed gambler would put his money on the directors to fend off any challenges from shareholders. That simply shows that information is the key and the shareholders lack information).

Last comment: questions about insider trading belong, in the regulatory sense, to IFSRA and not ODCE. IFSRA was never intended to function to protect people like the the Anglo Irish Bank shareholders. If the Government had intended any such purpose it would have made provision for shareholders to bring a class action themselves and, just as importantly, would have given them a specific right to cite breaches of statutory duty as a ground for a civil claim by them. The whole thrust of modern government in Ireland is to prevent any such personal action of vindication.

Interestingly, it was during the last major credit crunch (the Wall St. Crash) that the law of Torts was inflated to almost rival the domination of criminal and contract law in the common law legal world.

It happened in 1932, in Donoghue v Stevenson [1932] AC 562. The defence in the case relied on the fact that the Plaintiff had no privity of contract with the Defendant. She, the Plaintiff had consumed some of the contents of a bottle of ginger beer. She discovered what she perceived as the remains of a decomposing snail in the bottom of the bottle and became ill as a consequence. She had been given the beer by the purchaser.

The court found in her favour by extending the reach of of the law of negligence. Before 1932 the law of negligence was a wilderness of special circumstances in which liability would be fixed on particular people. The liability of common carriers was typical of this.

The consequential growth of the law of negligence was limited by the fault principle and the proximity principle. The defendant would only be liable if the plaintiff could show that the defendant was guilty of doing something or failing to do something which the defendant ought to have done or not done and thus caused the damage to the plaintiff. In addition, the plaintiff had to show that the injury to the plaintiff was reasonably foreseeable by the defendant. If the causation chain was too long the defendant was not liable.

The law of tort does not deliver the benefits of universal insurance.

In 8 A.D. the Emperor Augustus condemned the poet Ovid to live in Tomis in Moesia.

Tomis was at the edge of the Roman Empire on the Black Sea, near the mouths of the Danube, a mere 450 miles or so from a bend in the Volga where Stalingrad would later be sited.

Ovid’s trial was held in camera before the Emperor. His ostensible offence was the writing of the Ars Amatoria. Eight years had passed since its publication: the Emperor’s real motivation lay in the discovery of the wanton life of his daughter Julia and he was in search of a scapegoat.

Ovid was that scapegoat.

This truth, or context, deprived Ovid of the chance to address the Emperor’s motivation in condemning him to exile, as he wrote from Tomis to his friends and public in Rome.

In the face of power, formally judicial or otherwise, it is necessary to be circumspect.

As Ovid discovered, and told his Roman readers, the Danube and even the Black Sea would freeze over in winter. He expressed his anguish in the recollection of his last moments in Rome;

Iamque quiescebant voces hominumque canumque,
Lunaque nocturnos alta regebat equos.

At last all noise of men and dogs was still,
The moon was driving high o’er heaven’s hill.”

His life in Tomis is recalled and examined in “An Imaginary Life” by David Malouf. Malouf’s book, a sustained work of imagination, is a reflection on what it is to be human. Ovid’s humanity, in the loneliness of his exile, is counterpointed by the strange example of a feral boy found by the inhabitants of Tomis and brought in from the barbarous wastes of the steppe.

On 22nd June 1941 Germany attacked the Soviet Union. The attack was a surprise, and in breach of the Molotov-Ribbentrop Non-Aggression Pact of 1939 and, by that token, without a Declaration of War.

On 12th January 1943 the German 6th Army was trapped (approximately 190,000 men at that point) at Stalingrad. The Soviet Union had launched counter-offensives code named Uranus and Saturn (followed, later, by Mars).

Between 10th and 12th January 1943 the Germans at Stalingrad had lost 60,000 men: the Soviet Union had lost 26,000 there. Further north, on the Voronezh Front the Soviet Union, on 12th January 1943, committed 347,000 men to an attack on that Front against a total of Axis forces of 225,000 men. Further north, near Leningrad, the Soviet Union attacked with two armies totalling 244,000 men. The various Fronts reached from Leningrad to Stalingrad. At Stalingrad the temperature was 35 degrees below freezing.

This post is unseemly but necessary. It proposes a resolution for others, rather than the writer.

The new year, conventionally, calls for the turning of a new leaf; what bettter leaf to turn than to rethink the granite face of Order 84 of the Rules of the Superior Courts.

Under Order 84, challenges to public law must be brought as soon as possible. They should not be brought later than 3 months after the triggering of the cause of action where Prohibition, Mandamus or Quo Warranto are sought or later than 6 months after the triggering of the cause of action where Certiorari is sought.

To save face (a granite face), there is provision to apply for extension of time to make the necessary application to court. The chances of getting an extension are vanishingly small.

The effect of this Rule is to favour the State against the citizen.

The justification for this notion (that the State should be favoured) is the supposed need for certainty in public administration. This is a peculiar idea in this context; Prohibition, Mandamus, Quo Warranto or Certiorari do not present opportunity for an appeal. They challenge the legal base of the administrative action, not the correctness of the decision. A judge is not asked in these applications to substitute his/her view for that of the Executive. The judge is asked to check a legal error.

The argument behind Order 84 is not for certainty in administration, but for loyalty to the Executive. The judiciary ought not to profess loyalty in the Executive, particularly where the expectation of loyalty involves condoning legal wrongs, by definition.

The required resolution for the new year is, therefore, for the Bar to commit to the abandonment of the current terms of Order 84. Any member of the Bar on the Rules Committee of the Superior Courts should be asked by his/her colleagues to subscribe to that commitment and to pursue the the reform of Order 84. He/she should likewise lobby any members of the Committee who is not a lawyer to do likewise and, in due course, effect the necessary reform. (As George V. Higgins has noted, judges are people who used to be lawyers).

The High court has furnished some clarification of an important matter relating to the Personal Injuries Assessment Board Act 2003 (“the PIAB Act”), in Gunning v National Maternity Hospital & Ors.

There is provision in the PIAB Act (Section 17 (1) (b)) for the PIAB to decline to issue an assessment of compensation in respect of certain classes of injury. This, however, can relate only to claims that fall within the provisions of the PIAB Act. In Section 3 (d) of the PIAB Act, some actions for personal injury are excluded from the requirement to apply to the PIAB for an assessment. They are actions -

…arising out of the provision of any health service to a person, the carrying out of a medical or surgical procedure in relation to a person or the provision of any medical advice or treatment to a person”

The 1st Defendant in the action, the National Maternity Hospital, took issue with the alleged failure of the Plaintiff to procure a certificate from the PIAB under the PIAB Act, prior to the issuing of proceedings. (Where a certificate is required, the issue of the certificate is a condition precedent to the bringing of proceedings in court).

The Hospital argued that the pleadings in the action alleged a defect with, or in, a forceps used in the Hospital. It argued that a claim that a forceps was defective was not a medical negligence claim (“…the correctness or otherwise of the surgical procedure being carried out”), but was a defective product claim.

The court remarked on the arguments on the point as follows:

In my view, s. 3(d) of the Act of 2003 should be construed as applying to the factual circumstances out of which an action arises, rather than applying to the specific legal causes of action set out in the legal proceedings. I say this because if the latter approach is followed, it would result in some parts of the same grievance or complaint falling within the remit of the P.I.A.B and others falling outside. This would clearly be an undesirable situation, as it could result in two aspects of the same personal injury complaint proceeding in parallel in two jurisdictions, i.e. the Courts and the P.I.A.B.”

Although that is a valuable pointer, it is not now any more clear what the words “arising out of the provision of any health service to a person , the carrying out of a medical or surgical procedure in relation to a person or the provision of any medical advice or treatment to a person…” means, even in the context of “…factual circumstances…”.

Does it mean that only claims challenging the consequences flowing from the provision of such services are exempted by Section 3 (d) of the PIAB Act and not any arising in connection with the provision of such services?

If a patient in a Hospital or other health care setting slips and falls on the floor of the facility is he/she obliged to seek a certificate from the PIAB, or not? On the basis of Gunning v National Maternity Hospital & Ors, it would appear not. However, if a potential Plaintiff, taking no chances, applies for a certificate and the PIAB declines jurisdiction it would be open to the defendant Hospital or health care facility to plead that the Plaintiff had not complied with the PIAB Act. Gunning suggests that the practical solution is to treat the identity of the Defendant as indicative of the application of Section 3 (d) of the PIAB Act, but there must be a limit to that approach. Is there a difference between a patient slipping and falling in the corridor of a Hospital and the same patient (ex-patient?) being knocked down in the Hospital car park as he/she leaves?

Will the only relevant point of difference be the identity of the person causing the injury?