It is essential to make the correct strategic decisions for the forthcoming litigation.

By far, the most attractive basis of claim for a former shareholder is one of Fraudulent Trading.

The cause of action springs from the terms of Section 297A of the Companies Act 1963. (Inserted by Section 138 of the Companies Act 1990).

The section provides:

297A.—(1) If in the course of winding up of a company or in the course of proceedings under the Companies (Amendment) Act, 1990 , it appears that—

( a ) any person was, while an officer of the company, knowingly a party to the carrying on of any business of the company in a reckless manner; or

( b ) any person was knowingly a party to the carrying on of any business of the company with intent to defraud creditors of the company, or creditors of any other-person or for any fraudulent purpose;

the court, on the application of the receiver, examiner, liquidator or any creditor or contributory of the company, may, if it thinks it proper to do so, declare that such person shall be personally responsible, without any limitation of liability, for all or any part of the debts or other liabilities of the company as the court may direct.”

It has been established in case law that it is not necessary to prove a course of dealing to establish the liability; one transaction is sufficient.

Better still, the claim can be maintained against anybody, not just directors or employees of the target company. (“…was knowingly a party to the carrying on of any business of the company …for any fraudulent purpose”.

What proceedings are available under the Companies (Amendment) Act 1990? It provides, in Section 2, for the appointment of an Examiner to a company.

Section 2 provides:

2.—(1) Where it appears to the court that—

( a ) a company is or is likely to be unable to pay its debts, and

( b ) no notice of a resolution for the winding-up of the company has been given under section 252 of the Principal Act more than 7 days before the application hereinafter referred to, and

( c ) no order has been made for the winding-up of the company,

it may, on application by petition presented, appoint an examiner to the company for the purpose of examining the state of the company’s affairs and performing such duties in relation to the company as may be imposed by or under this Act.”

Here again the Minister for Finance can be of assistance. He can confirm that Anglo Irish bank is unable to pay its debts. Furthermore, in the case of Anglo Irish Bank an application can be made to the High Court only by the Central Bank. Section 3 of the Companies (Amendment) Act 1990 provides;

3.—(1) Subject to subsection (2), a petition under section 2 may be presented by—

( a ) the company, or

( b ) the directors of the company, or

( c ) a creditor, or contingent or prospective creditor (including an employee), of the company, or

( d ) members of the company holding at the date of the presentation of a petition under that section not less than one tenth of such of the paid-up capital of the company as carries at that date the right of voting at general meetings of the company,

or by all or any of those parties, together or separately.

( 2 ) ( a ) Where the company referred to in section 2 is an insurer, a petition under that section may be presented only by the Minister, and subsection (1) of this section shall not apply to the company.

( b ) Where the company referred to in section 2 is the holder of a licence under section 9 of the Central Bank Act, 1971 , or any other company supervised by the Central Bank under any enactment, a petition under section 2 may be presented only by the Central Bank, and subsection (1) of this section shall not apply to the company.”

No doubt the Central Bank, having a bad record to date in relation to its duties, will be only too anxious to make the necessary application to the High Court. Otherwise entitlements of the former shareholders in Anglo Irish Bank will be seriously impaired and rendered, possibly, nugatory and, conversely, wrongdoers will escape with impunity.

No official reports are to hand and yet we now know a great deal of pertinent information about the Anglo Irish Bank scandal.

It is now possible to see the shape of appropriate litigation.

There is a possible obstacle however, in the form of the Minister for Finance. Under the terms of Section 9 of the Anglo Irish Bank Corporation Act 2009, where a right to issue proceedings springs from, effectively, the passing of the Act, that right cannot be exercised without the prior consent of the Minister for Finance.

The Anglo Irish Bank “shareholders” are all “former shareholders”; the shares of the Bank have been transferred to the Minister. Logically, no rights to issue proceedings by former shareholders against proposed Defendants can arise from the expropriation of the shares by the Minister for Finance, but it would be foolhardy to sue without first writing to the Minister and obtaining his consent to issue proceedings, seeking civil remedies.

He has publicly stated he has no wish to shelter anybody from the criminal and civil consequences of their actions or failures. He presumably will readily give his consent to the bringing of civil proceedings, therefore.

Any contemplated proceedings must be considered as being, inter alia, a derivative action. In other words, that Anglo Irish Bank is made a defendant. This is necessary where the breach of duty was to the company.

There is another reason to write to the Minister for Finance; it lies in the terms of Section 251 of the Companies Act 1990.

He should be asked to confirm that “…the reason, or the principal reason, for its not being wound up is the insufficiency of its assets”.

This would make it easier to demonstrate that proposition to a court, and the Minister is better positioned to state this fact than any former shareholder.

That’s why the letter should be written to him.

Despite the incompetence (to be temporarily mealy-mouthed) of The Irish Financial Regulatory Authority (the Central Bank of Ireland trading under a pseudonym) the ugly truth just may leak out, despite the best efforts of Brian Lenihan and Brian Cowen to prevent it from doing so.

It is not credible that they do not know what is to be known.

We have to wait for the thumb screws to be applied to the Directors and executives of Anglo Irish Bank; only then will we hear what they know. What they know are the names of the other conspirators.

Unfortunately this will take some time; more time if the process is delayed or obstructed.

Meanwhile the other conspirators will be fully at large to do further damage to Ireland, its people and its future.

Brian Cowen is one of those people who feel the weakness of “rejecting” something; he wants to claim he has “refuted” it, which he has not.

Asserting otherwise is an expression of contempt for the Irish public.

Taxis are good things. As they carry speakers to public debates, for instance, they provide, because of the lack of distraction by traffic, the possibility of reviewing what is to be publicly said.

OK, that’s too sweeping a statement and applies to a limited number of occasions; say, debates on whether God exists or not.

It will not apply to debates on the legitimacy of tight time limits on applications for Judicial Review under Order 84 of the Rules of the Superior Courts, because there are no such debates.

The reliable Law Reform Commission published a paper examining the procedures relating to “ordinary’ Judicial Review and “statutory” Judicial Review, which can be seen HERE.

An examination of procedures, usually, assumes legitimacy.

Of course, there probably are some debates somewhere, but they are not public. My guess is that they take place in Dublin 4 or, possibly, at the top of Henrietta St., in Dublin 7.

The truth is, Judicial Review is a contraption. It’s cobbled together, dictated by circumstances and dubiously cast in the form of a general law.

See HERE for a previous reference by this writer to Irish Judicial Review.

Now, the legal jungle drums tell me that the State itself is aggrieved by the tight time limits in Order 84.

Judgment is awaited in a case where the State itself is seeking Judicial Review of a decision, time having run under Order 84.

A la W. B. Yeats, “And what rough beast, its hour come round at last, slouches towards Bethlehem to be born?”

(The title here is contrived; I am simply seizing on a chance to use the plural of “taxi” and show that there is such a word and such a spelling. Too often people believe, and act accordingly, that the plural of taxi is taxi’s.)

We surely want to know the outcome of the case referred to HERE.

However, we’re very busy attending CPD courses and the like and we can easily miss the delivery of judgment. In any event, there is a tendency for judges to notify the members of the bar of impending judgment and to ignore the solicitors (and of course, the litigants).

The answer is Twitter.

See HERE for the uses of Twitter. Every judge can now have his/her “followers” and indeed, may use Twitter to sample opinion with a view to staying onside any any particularly thorny legal question.

Think how handy it would be to know that the legal profession are sanguine with the proposal to remove the reference to God from the Constitution!

The uses are endless.

Under Section 154 of the Planning and Development Act 2000 a planning authority may issue an enforcement notice on an owner or occupier of land in relation to any development.

The matters to be specified in the notice are set out in Section 154. Suffice to say that, pursuant to Section 154 (8), failure to comply with the notice is a criminal offence.

This is very strange.

Firstly, the Planning and Development Act 2000 places no express obligation on the prosecution to prove that the “development” is unauthorised. Development, whether of use or of works, is not unauthorised unless it post-dates 1st October 1964.

Secondly, the Planning and Development Act 2000 makes no express provision for some obvious defences to any requirement that might be made in a notice, such as;

that the “development” is authorised;

that the “development” is not unauthorised;

that the “development” is exempted development:

In short, the offence seems not to be related to planning (sustainable or otherwise), just a failure to follow what may be a caprice of a planning authority official.

If that is true, it raises constitutional issues in any prosecution under Section 154 (8).

“Seems”, in this context is important. It is not inevitable that the offence actually constitute a failure to comply with a notice simpliciter.

The District Court (the offence is triable summarily) is at liberty to interpret the the Section and the evidential burden on the prosecution to avoid working a breach of the constitution. Under the European Convention on Human Rights Act 2003, there is an obligation on Irish courts to interpret legislation to avoid breaches of the European Convention on Human Rights (in this particular instance Article 6 thereof). It is regularly asserted that the Irish constitution already embodies standards equal to if not greater than the European Convention on Human Rights. A prosecution under Section 154 (8) is the ideal occasion to show that this is true.

In Ireland, a special regime has been provided for quarries under section 261 of the Planning and Development Act 2000.

The section requires that information on a quarry be registered with the relevant local authority. The deadline for registering the information was 28th April 2005.

Section 261 10 (a) provides;

A quarry to which this section applies in respect of which the owner or operator fails to provide information in relation to the operations of the quarry in accordance with subsection (1) or in accordance with a requirement under subsection (3) shall be unauthorised development.”

The operation of a quarry clearly falls within the definition of “development”.

In this Act, “development” means, except where the context otherwise requires, the carrying out of any works on, in, over or under land or the making of any material change in the use of any structures or other land.”

Under Section 32 of the Planning and Development Act 2000 there is an obligation to obtain a planning permission for development.

32.—(1) Subject to the other provisions of this Act, permission shall be required under this Part—

(a) in respect of any development of land, not being exempted development, and

(b) in the case of development which is unauthorised, for the retention of that unauthorised development.

(2) A person shall not carry out any development in respect of which permission is required by subsection (1), except under and in accordance with a permission granted under this Part.”

Taken with the definition of “unauthorised use”:-

“unauthorised use” means, in relation to land, use commenced on or after 1 October 1964, being a use which is a material change in use of any structure or other land and being development other than—

(a) exempted development (within the meaning of section 4 of the Act of 1963 or section 4 of this Act), or

(b) development which is the subject of a permission granted under Part IV of the Act of 1963 or under section 34 of this Act, being a permission which has not been revoked, and which is carried out in compliance with that permission or any condition to which that permission is subject;”

a quarry requires to have a planning permission or established pre-1964 use AND be “registered” under Section 261 before 28th April 2005.

(Quarries are not “registered” under Section 261; the required information furnished to the local authority is entered on the relevant register.)

There is a canard abroad that “registration” of a quarry has the effect of making it lawful in the way the grant of a planning permission would. This, by definition, is wrong.

Quarries, no less than any other development, are subject to control by application to the High Court under Section 160 of the Planning and Development Act 2000.

Any person may make the application for an injunction under that section.

Supposedly, a new era has dawned in Ireland for standard contracts in the public sector. See one new Construction contract HERE and another HERE.

The major change in these contracts is the shifting of risk from the public authority to the contractor. In general, these forms are intended to bring certainty and security to the State; whether they do so for the contractor is another matter.

That aside, these forms indicate an essential for all contracts; the formation and expression of agreement through offer and acceptance. Either side can make an offer which may be accepted by the other side. (Public servants are not free to accept offers which effectively vary the standard public authority terms but private persons, in their contracts, are completely free to do so). An offer which is met by a counter offer is declined, or not accepted.

Offers, and, by the same token, contracts, may be oral or written. It is common that they are both; the oral element may refer to substantial written terms as in “… I accept those terms”.

When the contract is complex (construction contracts are complex) the offer and the acceptance must refer to all the essential terms, and often all the terms, essential or not; otherwise there is no agreement.

For lawyers there are interesting rules about the time of the making of a contract. They relate to the receipt of offer and the receipt of acceptance. If a party tries to withdraw an offer it will be unable to do so after acceptance is communicated. (To withdraw the “offer” at that point is to breach the new agreement). Sometimes, due to delays in communications, a legitimate withdrawal of an offer (no acceptance having been communicated) becomes ineffective if the acceptance is delivered before your withdrawal is delivered.

Sam Goldwyn (of Metro-Goldwyn-Mayer, the US film producers) said of oral contracts, that they were not worth the paper they were written on. He was right, because of the lack of certainty they embody. Inevitably the two interlocutors making the “oral contract” will have differing recollections of the terms agreed. Litigation on such a contract is an unpredictable gamble.

Communication of offer and acceptance (ignoring EU regulation on the issue) can determine the place of the making of a contract. The place of the making of a contract (ignoring EU regulation on the issue) will determine the applicable law of the contract.

It is a surprising fact that most contracts are concluded without reference to lawyers. It is surprising because of the extent of the law of contract and the effect of getting something wrong in the conclusion of the contract.

Contract law is an essential element of the world of commerce. Buying and selling things is what contract law is about. So, too, is the provision of services.

Most contracts are for small items and small sums; our transactions as we buy our groceries are typical. We do not expect to have to enter written contracts for these items, and we don’t. Nevertheless, these sales are subject to ascertainable conditions and terms, nowadays often emanating from the European Parliament.

If the Government decides to build substantial roadways across the landscape it will, of necessity, enter a contract, or contracts, to achieve that objective; the alternative would be to establish a national workforce in the employment of the State to directly build the roadways. We don’t do that.

Signing a contract for a new roadway (or a new building) is a significant matter. The contract will have to provide for a great number of things, not least the specification for the type or quality of road or building.

A lawyer should not be far removed from this occasion. After all, who drafted the contract? It should have been a lawyer. What if the written terms contain an ambiguity? There is a standard method, or rule, for dealing with that; the contract is interpreted against the person who drafted it.

There is another practical approach; use a standard form of contract. The benefits of such a form are enormous. Any ambiguities will have been eliminated, and the experience of predecessors will have been built into the contract with clauses providing for all the issues and matters that need to be addressed or provided for.

However, these large contracts will often have special conditions to be inserted into them; the facts will require it. It is a general rule that special conditions override general conditions where there is a conflict between them. In that case there is an unavoidable need for a lawyer.

In the construction industry many contracts commence as a consequence of the conclusion of the main contract. The contractor will, of necessity, have to source the skills required to do some of the work, possibly most of it, from specialist sub-contractors. Because of the time consumed in finding the sub-contractors, there may be exchanges of letters of intent or such like. Astonishingly, the result may be that there is no contract between the contractor and the sub-contractor. If the sub-contractor does work in such circumstances, it will still be entitled to be paid. The claim will be in quasi-contract on a “quantum meruit” basis. The work will be valued at market rates and a profit element will then be added. That is what the sub-contractor will be entitled to.

For the contractor, this may be a severe blow. Claims of delay, if any, (there will be such) and consequential, loss will not be enforceable by the contractor.

Comment on the situation at Anglo Irish Bank is, if it is fair, privileged. The matter is one of public interest.

This means it is open to people to speak about the situation freely without worrying that they might be the subject of legal proceedings for defamation.

See an early post HERE dealing with, inter alia, FAIR COMMENT.