Homer nodded; the “press release” from Bill Prasifka was in fact the Financial Services Ombudsman’s Annual Report for 2009.

Bill took the job in 2010, so he’s looking back to the long lost past.

Surprisingly for him (he’s self confident and apparently not self satisfied) he made no remark about the following in the report:

“In two instances the compensation awarded is being paid over a period of time in instalments as the providers’ professional indemnity insurance would not pay up the amounts in question – €50,000 and €15,000 respectively. In two other instances where High Court appeals went in the Ombudsman’s favour the provider concerned stated that it may not be able to pay the €60,000 awarded as it had no funds. Where large awards had been made and are under appeal to the High Court – €500,000, €700,000 and €100,000 – the professional indemnity insurer of the providers has indicated that it will not be willing to pay up that award if the appeal is unsuccessful.”

Subject to clarification as to the reasons for refusal of indemnity (Bill seems to be implying that the insurers are refusing payment to HIM. Well, yes they would. Because we in Ireland do not have UK legislation to allow injured third parties claim benefits of a policy taken out by a wrongdoer.

Will Bill mention this to Mathew Elderfield and Professor Holohan? Will they write a letter to the Taoiseach seeking urgent legislation to remedy the situation? Will the Taoiseach act? Will he, feck!

Proving a loss of profit is a common event in “business interruption” insurance. It will also arise as part of a claim against a wrongdoer where the damage complained of has closed or stymied the business.

However, it is not immediately obvious what the method of calculation should be. The claim is, inherently, speculative. The loss is the profit which would have been generated but for the wrongful act. The turnover for a prior relevant period would be a start, but not conclusively so; what if the turnover was in sharp decline? (As has happened in banking and construction in Ireland recently). Of course the turnover may have been accelerating (as is the current position with the business of lawyers practising in the field of professional negligence).

It is necessary therefore to find the trend.

It is also necessary to remember that a reduction in turnover will not reflect exactly the reduction in profit; many overheads remain while the business limps on; in short, the profit reduction percentage will exceed the reduction in turnover expressed as a percentage.

Bill Prasifka, the new Financial Services Ombudsman has started well, if we can properly understand recent newspaper reports. He seems to have issued some form of Press Release but it’s not on his website yet.

The reports credit him with underlining that he is limited in the amount of compensation he may award against the anonymous “regulated” financial services bodies (banks) he polices. (He does’nt really; he reacts to complaints).

Consequently, Bill awarded the maximum, €250,000, to a farming couple who lost much more than that.

The limit is set in regulation, as follows:

“The amount of 250,000 euro is prescribed by Council as the maximum amount of compensation payable in respect of all other complaints for the purposes of Section 57CI(5) and Section 57CI(4)(d) of the Central Bank Act 1942 (as amended by Section 16 of the Central Bank and Financial Services Authority Act of Ireland Act 2004).”

This is comedy. Bill is himself policed by a Council; they write the regulations. The Minister for Finance appoints them.

Who are they? I do not know, but we learned recently from the Irish Times HERE that stuff like this was actually being written by the banks.

See our earlier post on the Financial Services Ombudsman HERE at paragraphs 12 to 15

If the BP oil disaster in the Gulf of Mexico happened in Irish waters who would be held responsible?

The question is intentionally ambiguous. It seems to refer to a functioning “administration” which would search out culprits and assign blame and punishment. It seems also to refer to the principles by which blame and perhaps punishment would be assigned.

The first aspect might lead to a rant and should be avoided; it is the second aspect to which I refer, and even that can prove contentious. Consequently, I am invoking consideration of the civil law only.

We know that BP is the lead partner in the drilling of the oil well. We know that the partnership hired an oil drilling platform, and crew, from Transocean. It also engaged Halliburton, as engineers, to pump cement slurry into part of the oil well structures to contain oil.

If damage is caused to a third person during a BP-like operation in Ireland, that person would look to the law of negligence and nuisance to found a claim for compensation. The burden of proving negligence would lie on the injured person. It can be anticipated that the BP partnership would plead that it hired competent independent contractors and that, in standard Irish legal principles, it is not liable for damage caused by any negligence of those contractors.
The Plaintiff would, understandably, reject this. Some obligations cannot be delegated, particularly if they are risky. Drilling an oil well under the sea is risky, particularly at a depth of a mile.

The Plaintiff would still have to prove negligence. If the cause of the accident is to remain unknown, the Plaintiff might be in trouble. (In the BP incident, this is the significance of the admission Barack Obama extracted from BP; proof of negligence need not now be addressed by claimants in civil negligence claims against the BP partnership.)

In Ireland, there would be no admission of liability by a Defendant like BP. Faced by the formidable problems in proving liability in negligence, an Irish Plaintiff would look to the law of nuisance for success. Nuisance is a tort of strict liability. A Plaintiff does not need to prove “fault” to win. He simply needs to prove the source of the damage and that the Defendant was the source.

A leaking oil well is a public nuisance. If the oil damages the property of others the Defendant drilling the well is strictly liable.

Proof of loss from such a source would, itself, require to be sophisticated. Proving loss of profit is not easily done, but would be easy in comparison to the obstacles Plaintiffs commonly have to face in Ireland to hold powerful interests to account.

1. I have lost my savings in an investment with XXX Building Society. What can I do?

It depends on the facts. Deposits in a Building Society or a Bank are protected by the Government guarantee. Even with the collapse of Anglo Irish Bank and Irish Nationwide Building Society, the depositors with those institutions were secured and the deposits are available to be withdrawn. (In reality, all the deposits were lost in those institutions; it is the taxpayer who is replacing your lost deposit).

2. My savings were not a deposit when they lost their value. Can I still do something?

Other forms of “saving” are not as protected. If you purchased a bond it may be tied to general market values in say, the property market. The terms of the bond may govern your exposure to that risk.

3. I did not know of the risk when I bought the bond. Does that matter?

Yes, it matters a great deal. Only an unsophisticated investor would not have appreciated the risk; even so, the documentation given to you would have told you of the risk. However, if what you say is true, it shows you were an unsophisticated and vulnerable consumer. A consumer, at law, is not bound by unfair terms (or prohibited practices).

4. What is an unfair term or prohibited practice?

An unfair term is one falling into the definition of that phrase in SI 27/1995 as amended by SI 307/2000.

SI 27/1995 says:-

“…a contractual term shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer, taking into account the nature of the goods or services for which the contract was concluded and all circumstances attending the conclusion of the contract and all other terms of the contract or of another contract on which it is dependent.”

5. What does that mean?

It depends on the facts of the case. Pay particular attention to Paragraph 2 of the 3rd Schedule of Statutory Instrument 27/1995. Sub-paragraphs g), j) and l) of Paragraph 1 of the 3rd Schedule do not apply to:-

“…transactions in transferable securities, financial instruments and other products or services where the price is linked to fluctuations in a stock exchange quotation or index or a financial market rate that the seller or supplier does not control;”

6. Is that a reference to prevailing property market values?

It would appear not. (The Stock Exchanges do not maintain a direct “property index”). Furthermore, that limitation only applies to transactions “… where the price is linked…”. If the price of the transaction is not so linked, the limitation is not relevant.

7. What about prohibited practices. What are they?

They are listed in Section 55 of the Consumer Protection Act 2007. You should carefully read Section 55 (1) (t), which reads:-

“(t) making a representation to a consumer that is inaccurate to a material degree in respect of market conditions, or in respect of the possibility of finding a product, with the intention of inducing the consumer to purchase a product at conditions less favourable than normal market conditions;”

That indicates that any aggrieved “investor” should explore what were the normal market conditions at the time of “purchase” and compare them with the conditions represented to him/her. (All of this is a reference to misleading information given to the investor, not a reference to better terms being available elsewhere). So, if the consumer is misled into thinking that a bond is as safe as a deposit, that is a prohibited practice. Or if the consumer is misled into thinking that a bond is the same as a deposit but with a higher interest return, that is a prohibited practice.

8. I thought only consumers who bought “goods” as opposed to “services” were protected by the Consumer Protection Act?

You were mistaken. It applies to the supply of goods and services. The Act says:-

“” product ” means goods or services;”

9. If I can prove I was misled do I escape from the loss?

Possibly. Read Section 43 of the Consumer Protection Act 2007. Section 43 (1) provides:-

“43.- (1) A commercial practice is misleading if it includes the provision of false information in relation to any matter set out in subsection (3) and that information would be likely to cause the average consumer to make a transactional decision that the average consumer would not otherwise make.”

Sub-section (3) (iv) refers to “…its benefits or fitness for purpose;” In short, if the consumer informs the trader of his or her purpose, the trader will be misleading the consumer if the product is sold avowedly for that purpose and it does not serve the purpose. Needless to say, if the consumer is misled as to the fitness for purpose of the investment, the consumer cannot make an appropriate transactional decision. There are many instances of misleading practices in the Section. The more instances that apply to any case, the greater the chance of prevailing in the struggle to get compensation.

10. What about the obligations on financial services practitioners to comply with SI 60/2007. Surely that is of assistance to consumers?

Possibly it is. To be sure, a consumer should always insist that the trader confirm, in writing, that it subscribes to, and complies with, the provisions of that Statutory Instrument (SI 60/2007). The Statutory Instrument embodies the regulations to which banks etc. are obliquely referring when they say in their advertisements that they “… are regulated by the Financial Regulator”. (We now know that the Financial Regulator was not regulating them). By procuring the reference in writing, the consumer will, without the possibility of contradiction or denial, get the benefit of the provisions of SI 60/2007 through the application of Section 45 (1) (c) of the Consumer Protection Act 2007.That Section reads:-

“45.- (1) A commercial practice is misleading if-
(a) it involves a representation that the trader abides, or is bound, by a code of practice,
(b) the representation referred to in paragraph (a) would be likely to cause the average consumer to make a transactional decision that the average consumer would not otherwise make, and
(c) the trader fails to comply with a firm commitment in that code of practice.”

11. Surely the Financial Regulator will look after me?

No. He may prosecute the offender, but he will not look after a consumer.

12. What about the Financial Services Ombudsman? Will he look after me?

He may, but be ready to urgently apply to the High Court in the event he makes a finding adverse to your interests. Under Section 57CI of the Central Bank Act 1942 as inserted by Section 16 of the Central Bank and Financial Services Authority of Ireland Act 2004, the adjudication of the Ombudsman is binding on a complainant. There is, according to the Ombudsman’s office, only 21 days from the date of the decision (not the date the Complainant learns of it) to lodge the appeal in the High Court. This is very inadequate and calculatedly so. See the substantial review of the Ombudsman process in the High Court JR decision relating to Enfield Credit Union and J & E Davy HERE.

13. Do I have to go through the Financial Services Ombudsman’s procedure?

No. You can litigate directly with the financial services provider in the appropriate court.

14. Is there an advantage in going to the court directly?

Yes. As noted by the High Court judge in the Enfield v Davy case, the court will not substitute its judgment for the decision of the Ombudsman. Consequently, if that High Court view of the legislation is correct (it may not be), a Complainant will lose the control over the complaint that litigation will give and will cede control to the Ombudsman, whose procedures may turn out to be cavalierly informal.

15. Is there a disadvantage in going to court directly?

Yes. It is much more expensive than the Ombudsman’s process. However, that disadvantage may be offset by the fact that the case will be heard in open court. The Ombudsman’s procedure is dealt with in private. It will often be well worth the extra expense to control the procedure and have the case heard in public. Furthermore, the application of consumer legislation is likely to be more rigourous in a court than in the Ombudsman’s process.

Generally, we expect High court judges to intend to do justice on a persistent basis. (Despite the title of the Department of Justice, Equality and Law Reform, we expect less from the Department, it being a bureaucracy).
Nonetheless it appeared necessary to the Oireachatas to enjoin judges to do justice. We see this in Section 28 of the Civil Liability and Courts Act 2004.
(Of course the foregoing is a fiction. Our Executive has ensured that the Oireachatas does not function correctly; somebody other than the Oireachats decided the terms of the Act).
Section 28 reads:-

“28.—(1) In a personal injuries action (other than an action under section 48 of the Act of 1961), any income, profit or gain in respect of which—
(a) the plaintiff is making a claim, and
(b) (i) a return has not been made before the hearing of the action in accordance with the Taxes Consolidation Act 1997 , or
(ii) the plaintiff has not otherwise notified the Revenue Commissioners,
shall, for the purposes of assessing damages, be disregarded by the court, unless the court considers that in all the circumstances it would be unjust to disregard such income, profit or gain.”

This provision bristles with difficulties for a judge. Whatever the judge decides, an appeal court could and probably would take a different view. The Section implies that some people will get the compensation and some people will not. Why? We do not know, and not to know is wrong. The fact that a Defendant is insured must be a deciding factor, otherwise the decision to withhold compensation would result in tax foregone by fraud (or error?) being credited to an insurance company.
Is it possible that one or more insurance companies procured the insertion of this Section into the Act?

Yes it is. We see from the Irish Times that a committee of bankers’ representatives was designing legislation (for banks) as late as 2008.
Now we know how Government works.

The frequency with which patients are injured in Irish hospitals is very high. The current estimate is of 160,000 per year.

Who knows the exact figure? Presumably, the Health Service Executive does. If it does, why is that information not made public? If it does not know, why does it not know?
Let us assume that the HSE is a competent body and infused with goodwill towards the patients. Would it not be a good idea to try to eliminate the causes of accidents or adverse events? If it is such a body, should it not direct all the health care institutions under its control to investigate adverse events to analyse how an accident or adverse event occurred, to prevent its repetition? If such an analysis took place would the findings not be required to be disseminated to the staff? Otherwise how would the staff know what to look out for to avoid repetition?
Now, in the light of the foregoing, is there a system in Irish hospitals of recording and reviewing adverse events? It appears there is not. The evidence for this is a) practical experience of looking for records and documents and discovering an absence of such notes recording relevant events and b) we are forced, at a macro level, to guess or estimate the level of adverse event occurrence as evidenced by public conference statements.
Admittedly, the hospital could omit written records and could call a conference of staff for the second Friday after the event to discover what went wrong and resolve, collectively, to try to avoid a repeat of the event in the future. No notes would be kept of this conference.
Why did the Supreme Court not canvass such possibilities in Doherty v Reynolds and St. James’s Hospital [2004] IESC? In that case the Plaintiff had heartburn. Following his operation to deal with his complaint he discovered quickly that he had an injured shoulder. Before he left the hospital he complained of severe pain in his shoulder to, sequentially, a nurse and two doctors (one of whom was the anaesthetist in the operation). He was sent home. His GP, on the same evidence, referred him to Beaumont hospital, which, on the same evidence, admitted him for treatment.
The Supreme Court although remarking:-

“I have not the slightest doubt that the trial judge in this case was entitled to accept the evidence of the plaintiff, his wife and Father Flanagan as to the complaints of severe pain and limitation of movement in his right shoulder and arm that the plaintiff was making in the immediate aftermath of the operation. The absence of any records of these complaints by any of the hospital staff is certainly remarkable and reflects, at best from their point of view, a singularly inadequate system of record keeping. It is clear that the plaintiff, who had gone into hospital for an operation intended to deal with a condition of heartburn and acid reflux but was otherwise in normal health, came out suffering from a painful and disabling condition in his right shoulder and arm which did not respond to any treatment until some six years later: so much, at least, is not in dispute in this difficult case.”

- went on to reverse the High court verdict in favour of the Plaintiff and order a new trial because it disagreed with the High court finding that the principle of “Res Ipsa Loquitur” applied in the case.
The hospital staff gave evidence of their usual practices. The evidence was that such practices were safe. They, generally, said they had no recollection of the individual events of the Plaintiff’s operation. This was unsurprising; they were giving evidence seven years after the event. However, there was an exception; one nurse did have an individual recollection. Beaumont hospital had raised a query with the surgeon, who in turn, raised a query with one of the nurses. This happened in the month following the operation. Thus, the High court had evidence that the Plaintiff had complained of his injury while still in St. James’s hospital and Beaumont hospital had enquired, in its investigations of the Plaintiff’s injury.
Why was there no investigation by St. James‘s hospital following these complaints? In fact there was; it appears, on the evidence, it was confined to a conversation between a surgeon and a nurse.
Bearing in mind that the Supreme court thought that the hospital had “…a singularly inadequate system of record keeping”, it was remarkably indulgent in accepting that evidence from staff, of what they would ordinarily do, as opposed to what actually happened, was a sufficient response to the Plaintiff’s evidence. It was reasonably clear that the High court judge believed that the hospital staff were culpably ignorant and that the failure of the hospital to call ALL its witnesses was to be deprecated (and justified his implied conclusion of culpable ignorance).
On a global view, the HSE, it would appear, supported by the Supreme court, thinks ignorance is bliss.

Michael O’Leary, presumably, finally sought or was given proper legal advice. We can presume this from his craven back-pedaling we saw in the last few days.
He firstly refused to comply with Ryanair’s obligations, to compensate his customers for cancelled flights, under Council Regulation 261/2004, stating his obligations in terms of contract obligations only.
The next day he, cack-handedly said Ryanair would meet its obligations. He was cack-handed because the manner in which he made the concession was misleading; it suggested he had not changed his position and that customers were not entitled to any of the benefits he should have given to them.
If it were not for the fact that he referred to the Regulation obligations as “absurd” one would think he did not know of the Regulation, but he clearly did. What, then, changed his mind? What did he not know?
Despite the shameful failure of the Irish Government to introduce the possibility of conducting “class actions” in Ireland, O’Leary may have finally realized that he was going to be plunged into class actions in the UK.
Without exception, Ryanair travelers are “consumers” under EU law. Consequently, they are entitled to litigate disputes with Ryanair in the consumer’s place of residence.
Many of Ryanair’s customers were UK residents; they were going to issue proceedings in the UK. There, they could, and surely would, band together and litigate their claims as a class action. By this means they would off-set the advantage of size that Ryanair has over any single consumer, a circumstance perpetuated in Ireland by the sullen laziness of successive Irish Governments. (All that is required is to amend the Rules of the Superior Courts; something the Minister for Justice etc. could do in a flash).
As a measure of the power and benefit consumers would get from a class action, O’Leary folded just at the possibility of being at the receiving end of one, not waiting to find out what the experience would be like, an experience Brian Cowen will deny to Irish consumers even as he is driven from office.

THE HIGH COURT
2006 No. 3785P
Between
DIGITAL RIGHTS IRELAND LIMITED
Plaintiff
And
THE MINISTER FOR COMMUNICATIONS, MARINE AND NATURAL RESOURCES, THE MINISTER FOR JUSTICE, EQUALITY AND LAW REFORM, THE COMMISSIONER FOR THE GARDA SIOCHANA, IRELAND AND THE ATTORNEY GENERAL
Defendants
UPDATE (21/4/2010)
1. Digital Rights Ireland Ltd. has taken a case against the Irish Government as seen HERE.
2. McGarr Solicitors act for Digital Rights Ireland Ltd.
3. DRI brought an application to the High Court to seek a ruling from the ECJ on an EU law issue. The State responded with its motion challenging DRI’s right to bring the proceedings. The Irish Human Rights Commission applied for leave to make submissions in the proceedings. These Motions were heard in the High Court in July 2008.
4. Judge McKechnie reserved judgment on those issues before the Court.
5. The Plaintiff has asked the Court to refer the issue of the validity of Directive 2006/24/EC to the ECJ. The State had brought this question to the ECJ. (The hearing began in the ECJ the very morning the Motions opened before Judge McKechnie). The Plaintiff endorsed the State case but went further; it says the Directive is not valid, not simply on procedural grounds, but on substantive grounds of breach of human rights and the fundamental law of the EU. This was a very important difference between the State and the Plaintiff on the Directive point.
6. The State asked the Court to deny locus standi to the Plaintiff and, in default of success on that request, asked that the Court order the Plaintiff to furnish security for costs to the State. Judgement on these points had also been reserved.
7. The case was mentioned before Judge McKechnie on 25th March 2010 on which occasion he indicated he would deliver his reserved judgment on 21st April 2010.
8. On 21st April 2010 Judge McKechnie informed Counsel for the Applicant and the State that he intended to deliver his judgment on 30th April 2010.

Under Section 15 (3) of the Valuation Act 2001 State property is not rateable. Consequently, there is no obligation to pay rates on such property.

The Section reads:

“Subject to section 16 , relevant property, being a building or part of a building, land or a waterway or a harbour directly occupied by the State (including any land or building occupied by any Department or office of State, the Defence Forces or the Garda Síochána or used as a prison or place of detention), shall not be rateable.”

We have not heard (it’s early days) what proportion of the property taken by NAMA from the banks is now occupied by NAMA.

We need answers to some questions:

Is NAMA “the State”?

What does “occupied” mean?

A lot of money hangs on those questions.