1. It is arguably mistaken to anticipate professional negligence actions arising from the “Credit Crunch”. The professionals will be stockbrokers, bankers or money advisors of one sort or another in the financial services industry.

2. All of these professionals are connected to their clients by contract. The contracts cite “terms and conditions”, frequently alluding to the fact that they, no more than any professional do not guarantee a particular result.

3. What they are obliged to provide, however, is a competent careful discharge of their obligations. This covers the “duty of care” in tort law, but also any contractual or other obligations they carry.

4. In the field of Finance those obligations are considerable. They appear as contractual duties, fiduciary duties, duties of confidentiality, statutory and regulatory duties.

5. A fiduciary duty involves avoiding a conflict of interest, for instance. This is an absolute duty; it does not imply a need for care. Either there is a conflict or there is no conflict.

6. The claim of the professional that he “made a house call” will not be accepted where there was a conflict of interest between the “house” and the client.

7. The fiduciary’s duty is often expressed an obligation or duty of loyalty, but in practice inhibits behaviour which would be acceptable in other circumstances. A fiduciary is not free to follow his own interests; the interests of the client/beneficiary comes first. A fiduciary is not free to make a profit from his role; any such profit belongs to his client.

8. Many of the duties of a fiduciary are now imposed on professionals in the financial services industry as regulatory norms. Even if they are not available to be cited as the basis of a breach of duty, these regulatory norms are readily available to determine the implied contractual duties of the professional.

9. The Credit Crunch generated unprecedented circumstances for many large firms in the industry. Those are the circumstances where things are done which should not be done. In many instances, to recover losses, it is simply a matter of collecting the paper trail and instructing solicitors.

In the UK they purportedly reformed the system of civil justice with the Woolf Report. There is some reason to doubt this.

Now, a debate has started, questioning the complacent view that the reforms were successful.

The debate has the unseemly presence of Lord Woolf in it. It is unseemly for him to “defend” his “reforms”. The subject is too important to be tainted by an effort to defend a personal investment.

However, the debate is a salutary reminder of how far behind we in Ireland are. The UK has a debate; we have nothing.

Instead, we still have a Rules Committee that had to be restrained by the Oireachtas from compelling barristers to wear wigs and that coolly front-loads the costs of litigation on litigants; all without any input into these “ideas” from the profession.

1. McGarr Solicitors act for Jonathan O’Donnell. Jonathan O’Donnell was, apparently, arrested on the morning of 25th June 2009 in Broadhaven Bay, County Mayo by Gardai from Mayo Division.

2. He was taken to Ballina Garda Station and detained there.

3. Following application to the High Court later that day, the Court directed an inquiry into his detention under Article 40.4 of the Constitution of Ireland.

4. Formally, the Applicant is Jonathan O’Donnell; the Respondent is the Member in Charge of Ballina Garda Station.

5. The inquiry is returnable for Crt. 13 in the High Court, Four Courts, Dublin 7 at 10:45 a.m. on 26th June 2009.

The Construction Industry Federation says it is not getting ready to challenge NAMA (more particularly the legislation setting up NAMA).

We have only to go back to 2005 to find out why it is not gearing up.

In Construction Industry Federation v Dublin City Council [2005], the Supreme Court denied locus standi to the CIF because its members were easily able, individually, to take the litigation pursued by the CIF against Dublin City Council.

The Court said;

In the present case, the Appellant claims to have a sufficient interest on the basis that the proposed scheme affects all or almost all of its members in the functional area of the Respondent, and therefore the Appellant has a common interest with its members. However, it appears to me that to allow the Appellant to argue this point without relating it to any particular application and without showing any damage to the Appellant itself, means that the Court is being asked to deal with a hypothetical situation, which is always undesirable.”

So, too, now, CIF membes are easily able to take action for themselves.

The challenge, (there will be a challenge) will come from the members or some of them.

Minister Dermot Ahern, Minister for Justice etc., please vigourously, without fear or favour, (asked or given), defend the interests of the following Persons (while,it must be said, doing your potential 2011 Presidential candidacy chances no harm);

Isis; Marduk; Aphrodite; Quetzallcoatl; Selene; Kibuka; Zeus; Hermes; Tekkeitserto; Mader-Akka; Ops; Nanook; Yhi; Ghidjja; Odin; Jupiter; Acuecucyoticihuati;

When you are finished, you may, at your discretion, help Michael O’Leary how to plan the operation of his pay toilets on Ryanair flights, assuming he is still engaged in that project when you are finished yours, if ever.

Misrepresentation is a form of fraud.

Fraud is a little like the “golden thread” [of innocence until proven guilty] running through [British] justice; it means more on some occasions than on others.

In Lazarus Estates Ltd v Beasley [1956] 1QB 702 at 712-713 Denning LJ stated:

No court in this land will allow a person to keep an advantage which he has obtained by fraud. No judgment of a court, no order of a Minister, can be allowed to stand if it has been obtained by fraud. Fraud unravels everything. The court is careful not to find fraud unless it is distinctly pleaded and proved; but once it is proved, it vitiates judgments, contracts and all transactions whatsoever…”

The leading case on deceit is Derry v Peek [1889] UKHL

The promoters of a company issued a prospectus stating that they had a licence to use steam power to run a tram. They did not; they expected to get it as a mere formality. They were refused and the company failed. The shareholders sued for deceit. The action failed, because it was not proved that the directors lacked honest belief in what they had said.

What is in issue in an action claiming fraud is the state of mind of the defendant. It is rare that a plaintiff can prove the malignant state of mind of a fraudster.

Under Section 45 of the Sale of Goods and Supply of Services Act 1980 a right of action was created which ameliorated the burden on plaintiffs complaining of fraudulent behaviour or its equivalent.

In effect the burden of proof was reversed; the defendant must prove that he had a reasonable belief that what he said was true;

45.—(1) Where a person has entered into a contract after a misrepresentation has been made to him by another party thereto and as a result thereof he has suffered loss, then, if the person making the misrepresentation would be liable to damages in respect thereof had the misrepresentation been made fraudulently, that person shall be so liable notwithstanding that the misrepresentation was not made fraudulently, unless he proves that he had reasonable ground to believe and did believe up to the time the contract was made that the facts represented were true.”

We have the Ryan report to consider; there is a lot to consider.

What are we to make of the judges of that era? (Strictly the era has not ended; the Ryan Commission had a time period to consider, that period only has ended).

A handy, if not good, place to begin on this, is with Jeremy Bentham.

Bentham said, of “the right to silence”;

If all the criminals of every class, had assembled and framed a system after their own wishes, is not this rule the very first which they would have established for their security? Innocence never takes advantage of it; innocence claims the right of speaking, as guilt invokes the privilege of silence.”

As a matter of fact he was wrong in saying that “innocence never takes advantage of it”, otherwise the practice and procedure of criminal trials in his day would have demonstrated case after case of defendants proving themselves to be innocent, something that did not happen.

He was wrong also to imply that invocation of the “privilege of silence” was a sign of guilt. Determination of guilt was and is the precise purpose of a trial. His opinion implied that the burden of proof should rest on the accused, something civilised nations currently do not admit as reasonable.

In reality, Bentham was on the comfortable side of a power relationship.

He was not the first and will not be the last such person.

Crimes are prosecuted because it suits the person in power to launch the prosecution. Whether that is a proper action depends on the circumstances of the prosecutor as much as the circumstances of the accused.

What, for instance, of Ireland’s political and administrative leaders during the years of the Bush administration in the USA?

(Actually, let us confine the inquiry to the period after the passing of the International Criminal Court Act 2006).

Under Section 8 of the Act of 2006:

Any person who does any act specified in paragraph 3 of Article 25 (crimes ancillary to genocide, crimes against humanity and war crimes) is guilty of an offence (in this Act referred to as an “ancillary offence”)”

Under Article 25 (3) (c) it is an offence for a person who;

(c) For the purpose of facilitating the commission of such a crime, aids, abets or otherwise assists in its commission or its attempted commission, including providing the means for its commission;

“War crimes” are defined in Article 8 and include;

Wilfully depriving a prisoner of war or other protected person of the rights of fair and regular trial;”

That is exactly what George W. Bush and Donald Rumsfeld did to the prisoners of Guantanamo, as was generally known.

Furthermore, they used Shannon airport to facilitate the transport of some of those prisoners to Guantanamo;

When will we have an investigation of the complicity (or ignorance, if such be the case) of our politicians, particularly our Ministers for Justice etc. during those years, in relation to those matters?

This blog has previously referred to the wearing of wigs by barristers. Until fairly recently the wearing of a wig by a barrister was compulsory under the Rules of the Superior Courts. (The Rules are law [well, a kind of law] and are made by the Rules Committee. Its membership is chosen, it would appear, to be representative of some of the various “interests” in the legal system).

Currently, it is obligatory on judges of the superior courts to likewise wear wigs.

As an issue this is simply not open to debate. The wearing of wigs is required because that’s the way it is.

Situations like this can be explained, but not by seeking opinions to explain the reasons for the situation. Instead we have to look to psychology.

The real purpose is to assert wordlessly, the finality of rational adjudication from the judge. That is, it is intended to define rationality by reference to the wig; rationality emanates from the wig. Without it, there is doubt and possibly confusion.

In 1973 David Rosenhan and some colleagues demonstrated that “sane” and “insane” were social constructs.

Likewise, in the field of law, the “plaintiff”, the “defendant” and the “judge” are social constructs.

This very dangerous [from one point of view] for the judge.

Leo Tolstoy has remarked:

The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of doubt, what is laid before him.”

There must, in short, be mechanisms to cut short the revelation of alternative, including superior, expositions of reality.

The judicial wig is one of those mechanisms.

Many people, unlike this writer, keep a pet of some kind.

Holidays are problematic; do you take the pet with you?

What about your prostitute? Do you take her?

In the U.S. it is a crime to transport prostitutes, in certain circumstances, across State lines.

This law has obvious opportunity to cause a lot of unhappiness; it interferes with the natural ease with which a prostitute might have HER holidays.

In MORTENSEN v. U. S., 322 U.S. 369 (1944) the US Sepreme Court reversed the convictions by a jury, (affirmed on appeal) of Mr. and Mrs. Mortensen exactly on this principle.

The Court recited:

Petitioners were charged in two counts with violating Section 2 of the Mann Act in that they transported and caused to be transported, and aided and assisted in obtaining transportation for and in transporting, two girls in interstate commerce from Salt Lake City to Grand Island for the purpose of prostitution and debauchery, and with intent to induce, entice and compel the girls to give themselves up to debauchery and to engage in immoral practices.”

(It is amusing to reflect that J. Edgar Hoover was the principal person charged with implementing this law.)

The Court further recited:

The petitioners, man and wife, operated a house of prostitution in Grand Island, Nebraska. In 1940 they planned an automobile trip to Salt Lake City, Utah, in order to visit Mrs. Mortensen’s parents. Two girls who were employed by petitioners as prostitutes asked to be taken along for a vacation and the Mortensens agreed to their request. They motored to Yellowstone National Park and then on to Salt Lake City, where they all stayed at a tourist camp for four or five days. They visited Mrs. Mortensen’s parents and, in addition, the girls ‘went to shows and around in the parks’ and saw various other parts of the city. The four then returned in petitioners’ automobile to Grand Island; on arrival they drove immediately to petitioners’ house of ill fame and retired to their respective rooms. The following day one of the girls resumed her activities as a prostitute in petitioners’ employ, while the other did not resume such activities for a week or ten days because of illness. Both girls continued to act as prostitutes for petitioners for a year or more after their return from Salt Lake City.”

The prosecutor did not contend that the trip to Yellowstone etc. had been a crime; it was the return trip that was in issue.

The Court found: – “The sole purpose of the journey from beginning to end was to provide innocent recreation and a holiday for petitioners and the two girls.”

The Court noted the absence of any evidence directed to the purpose of the return and cited a statement from another case:

‘People not of good moral character, like others, travel from place to place and change their residence. But to say that because they indulge in illegal or immoral acts, they travel for that purpose, is to emphasize that which is incidental and ignore what is of primary significance.’

Pack your sun cream girls!

Occasionally this blog contains a misspelling. I have, for instance, misspelled “Brian Cowen” as “Brian Cowan”.

Nobody was misled; indeed, I was corrected by a reader.

There is, however, a human type that is radically intolerant of the mistakes of others. Alternatively, that type is inflexible in thought. Alternatively, these are human traits which some people have and others do not; and some people have both traits.

The result is that when a solicitor composes a letter for his/her client and writes;

Pursuant to Clause 7(13) of the Lease we as Tenant hereby give notice to you to determine the lease on 12 January 1995. . .”

the solicitor is fixed (not any more) with the serious consequences of failing to exercise a break clause for the Tenant.

If the solicitor had written:

Pursuant to Clause 7(13) of the Lease we as Tenant hereby give notice to you to determine the lease on the third anniversary thereof. . .”

there would have been no error. The third anniversary of the lease in question fell on 13th January 1995 and not 12th January 1995.

This was the issue in Mannai Investment Co Ltd v. Eagle Star Assurance [1997] UKHL

Lord Hoffman referred to Mrs. Malaprop’s line (in the play “The Rivals) “She is as obstinate as an allegory on the banks of the Nile”, to explain why the law should change on the interpretation of such notices. Most people understand what Mrs. Malaprop says; indeed they also understand that her mistake is a joke and is intended by the playwright (Richard Brinsley Sheridan). (For the sake of the joke, the playwright conflated crocodiles with alligators, there being no alligators on the banks of the Nile).

The judge went on to say;

Mrs. Malaprop’s problem was an imperfect understanding of the conventional meanings of English words. But the reason for the mistake does not really matter. We use the same process of adjustment when people have made mistakes about names or descriptions or days or times because they have forgotten or become mixed up. If one meets an acquaintance and he says “And how is Mary?” it may be obvious that he is referring to one’s wife, even if she is in fact called Jane. One may even, to avoid embarrassment, answer “Very well, thank you” without drawing attention to his mistake. The message has been unambiguously received and understood.”

Lord Hoffman, with the majority, allowed the Tenant’s appeal.

The mistake of the Tenant or its agent was to fail to calculate when the third anniversary fell. Indeed, as a practical matter the mistake was to calculate it at all, as can be seen from the suggested form of the notice shown above.

As Lord Hoffman pointed out, nobody was misled.