The Irish Times has reported Treasury Holdings v O’Kennedy (Dublin Circuit Court).

Treasury Holdings succeeded in its proceedings against Mary O’Kennedy. She failed to complete the purchase of an apartment from Treasury. She also failed to “engage” with Treasury, from which we can only surmise she did not properly defend the proceedings. Consequently we can only assume certain things;
1. She lacked the finance to buy, due to the collapse in the market providing mortgage finance; or
2. She sought to avoid completion because the market value was now less than the purchase price;
3. She was a “consumer”. She would, therefore, have had the benefit of the provisions of S.I. No. 27/1995 European Communities (Unfair Terms In Consumer Contracts) Regulations, 1995. Of course, if a proper defence is not advanced in the proceedings that benefit, if any, would be wasted
4. Her contract had a standard loan approval clause. Contracts for the purchase of property of the value of this apartment would normally contain a loan approval clause. If Ms. Kennedy was relying on drawing down borrowed finance to fund the purchase, that loan approval clause was a vital term her solicitor would require to be inserted before she signed the contract. There is no difficulty accessing suitable terms for such a clause; the Law Society of Ireland has published one (December 1979).
5. There is a problem however with most mortgage loan approvals; they do not guarantee the actual provision of the money. They are subject to conditions and the offer of finance can be withdrawn before drawdown.
6. The Law Society clause is slightly odd in its terms. It contains the words;

“…the loan approval is conditional on a survey satisfactory to the lending institution or a mortgage protection or life assurance policy being taken out or some other condition compliance with which is not within the control of the purchaser the loan shall not be deemed to be approved until the purchaser is in a position to accept the loan on terms which are within his reasonable power or procurement”

Arguably, the phrase “accept the loan” must mean “accept the money” as opposed to “accept the offer of money”.
7. There is, nonetheless, the possibility of the purchaser having a loan approval clause and a loan approval and being left without the money and with the liability under the contract.
8. Worse than that, developers often demand the deletion of the loan approval clause after the issue of the loan approval letter to the purchaser. (They refrain from returning the contract, signed by the developer, having received it signed from the purchaser). Deletion should be resisted.
9. A solicitor would be wise to get the agreement of the purchaser in writing to the deletion of the loan approval clause and wiser still to tell the purchaser in writing that the contract is no longer conditional and that he or she will be required to complete even if he or she cannot obtain a mortgage.
10. That aside, it is not wise to put up no defence to the developer’s proceedings seeking specific performance of the contract.

Auditors are “watchdogs, not bloodhounds” said the court in Re Kingston Cotton Mill Co. (No. 2) [1896] 2 Ch 279 CA. Even at the time this was a very limited view of what we can expect of auditors or their like. (It was also infelicitous; auditors are not and never were, even metaphorically, like “watchdogs”). Considering that Sherlock Holmes was an available “example” (1880 to 1907), it is surprising the judge did not feel more could be expected of the auditors of his day than he settled for.

The job of an auditor is to ascertain if the accounts provide “a true and fair view” of the company’s financial position. However, the auditor’s judgment on this is not, and should not be, absolute. After all, the auditor should not be the equivalent of an insurer where he pays if there is something wrong and loss accrues. In modern times the profession, as always, determines the liability of auditors. The profession has issued guidelines for auditors. Those guidelines now impose a higher standard on auditors than Re Kingston.

These guidelines were quoted in Moore Stephens (a firm) v Stone & Rolls Limited (in liquidation) [2009] UKHL 39

”Auditing Standard SAS 110 (issued January 1995) deals with fraud and error. It contains statements of auditing standards (SAS) and explanatory text in numbered paragraphs. SAS 110.1 states: “Auditors should plan and perform their audit procedures and evaluate and report the results thereof, recognising that fraud or error may materially affect the financial statements”. SAS 110.10 (para. 50) states that, on becoming aware of a suspected or actual instance of fraud, auditors
“should (a) consider whether the matter may be one that ought to be reported to a proper authority in the public interest; and where this is the case (b) except in the circumstances covered in SAS 110.12, discuss the matter with the board of directors, including any audit committee”.
SAS 110.12 (para. 52) provides that
“When a suspected or actual instance of fraud casts doubt on the integrity of the directors auditors should make a report direct to a proper authority in the public interest without delay and without informing the directors in advance.” “

The fact that the auditors in that case escaped by the skin of their teeth shows life is going to get difficult for the profession.

I have referred previously to the difficulties sometimes encountered with insurance companies.

However, an insurer does not always have the advantage.

If an insurer, meeting a claim of wrongful refusal of indemnity (meaning, the insured person sues for breach of contract following the making of a rejected claim), pleads a simple denial, the court will invariably restrain the defendant insurer from making an affirmative case and the insurer will be confined to undermining the plaintiff’s case (if it is possible).

This means that the plaintiff cannot and should not be surprised, in the litigation, by the advancement of some theory explaining the mechanism of loss (justifying the refusal of indemnity cover). In other words, the defendant insurer is obliged to plead its specific case and reason for refusing cover and cannot take the plaintiff by surprise in the running of the case.

Furthermore, if the defendant insurer is claiming that the claim falls into an exception specified in the contract of insurance, it is for the insurer defendant to prove that fact and not for the plaintiff insured to disprove it.

It is ironic that I should suggest HERE that an opinion should not be asked of a lawyer in any and every circumstance (or, specifically, should not be asked for in some circumstances) and then, belatedly, discover the blogging phenomenon that is Eoin O’Dell has availed of a disclaimer on his website.

What is good enough for Eoin O’Dell is good enough for McGarr Solicitors. We are now following his example (and some of his wording, which, we believe, he permits). The wording is not identical to his; his blog ranges into subjects where we do not venture. The reasons for this vary. We have, to date, for instance, refrained from telling the world our opinion of the film “The Last of the Mohicans”. (It is not a promotion of the myth of the noble savage; it rejects it. What is noble about Magua? Certainly, Uncas and Chingachgook are noble, not because they are savages but because they are civilized). (This being a blog and of limited space, it is not possible to reconcile the contradictory use of “civilized” in connection with characters unconnected with a city).

OUR DISCLAIMER

“We get some emails asking for legal advice. (Not surprisingly; that’s the business we are in).
However, this blog is not intended to convey, and should not be construed as, or used as a substitute for, legal advice. It is written for general, informational purposes, and reading it does not create a lawyer-client relationship. Moreover, this blog is always under construction, and the contents are always changing, so please do not rely on any post as a comprehensive or current statement of the law on any of the issues discussed. No responsibility of any kind is accepted for any reliance you may place on anything I have written here.
There are lots of links in my posts, but I am not in any way responsible for the content of sites linked from here – such sites are the responsibility of those who maintain them; complain to them, not to me.”

(I am going to ask our IT department to place this in a more central place; some things are beyond me).

Solicitors acting for land/building purchasers deliver “Requisitions on Title” to the vendors. The requisitions are direct questions addressing a range of issues of possible concern. Now that there is little or no conveyancing to be done it would be best to look at the process now and again to keep it fresh in the mind of the profession.

So, what to answer if asked,

Given its position, please confirm that the property has never suffered from flooding.”

Well, in this case HERE the reply was:-

Our clients confirm that the property has never suffered from flooding during their 14-year occupation.”

The sale closed and the purchasers found that the Thames river (at the bottom of the garden) flooded the property.

The purchasers have sued the vendors; the case is ongoing.

In cross-examination the vendor emphatically denies misleading the purchasers; he meant “the building” when he referred to “the property”. The building had never been flooded; just the garden, and that less than claimed by the purchasers.

So, Irish conveyancers, my reply to that purchaser’s requisition would have been:-

this is not a requisition on title”

On receipt of rejoinders my reply would have been:-

purchasers should make their own enquiries”.

We in Ireland have a precedent for this case and consequently practitioners should wake up when they see the reference to “the Vendors…say…..” in replies to requisitions.

Vendors often say more than their prayers.

If a trade supplier receives a Notice of a Creditors’ Meeting it means bad news. The money owing to the creditor is in jeopardy.

On receipt of the notice, check to see if it is valid. Under the Companies Acts, the notice must be sent at least 10 days prior to the date of the meeting. The notice must be accompanied by proxy forms. (The proxy forms are important; the Directors will seek to control the meeting with proxies in their favour).

The notice must also be advertised in two daily newspapers circulating in the vicinity of the registered office or principal place of business of the company. Purchase a copy of all such newspapers, promptly. A failure to comply with this obligation will undermine the validity of acts done at the Creditors’ meeting. (The advertisement is intended to alert creditors who have not received notice in the post; if they had attended they could have altered the outcome of the meeting). It is a criminal offence to fail to give proper or adequate notice of the meeting.

The company will have appointed a liquidator at the members’ EGM. That liquidator will attend the Creditors’ meeting. The creditors may propose a different person as liquidator. If a majority of creditors carry that proposal, the “company’s liquidator” will be supplanted by the new nominee. There should not, of course, be a “company’s liquidator”; a liquidator is required by law to be independent of the company or its directors.

Creditors should prepare for the Creditors’ meeting. At McGarr Solicitors we will advise on the questions to be asked by creditors at the meeting and will attend to represent the interests of creditors if asked to do so.

Michael Woods TD, while he was Minister for Education etc., made an arrangement with certain religious orders as to the obligation of the orders to pay for the physical, including sexual, abuse of children in their care.

That arrangement, it transpires, was astonishingly generous to the religious orders. Their liability was limited to €127,000,000; the real cost of the liability will exceed €1,000,000,000.

The real cost has emerged from the Commission to Inquire into Child Abuse. The Commission has recorded the instances of abuse; looked at the general circumstances in which the abuse took place, and has determined the sum appropriate to compensate the individual victim.

The Government has said that it cannot, for legal reasons, (unexpressed and unexplained) re-open the arrangement with the religious orders.

Presumably, (we do not know) this is a suggestion that the “arrangement” is
a contractually binding agreement.

That suggestion is questionable. Firstly, such a “contract” would be very unusual. To see how unusual it would be, it is necessary to reflect on what a religious order is; generally, it is a group of people with fluctuating and varying membership but enduring through time. It would closely resemble a partnership. Often the property of the order would be held by trustees for the purposes of the order.

In principle, and it has been found to be so in the abuse cases, the order can itself be guilty of crimes committed by its individual members.

It is the criminal element that makes the arrangement very unusual. It is not often that a criminal seeks the protection of the courts to enforce an agreement absolving him/her from the consequences of criminal behaviour.

Secondly, the criminal parties to the arrangement with Michael Woods knew of their crimes; he, presumably, did not. Even if he did, an agreement to suppress the State’s obligation to prosecute crime or to relieve the perpetrators of liability in whole or in part for those crimes would be contrary to public policy. The agreement, far from being binding, would be unenforceable.

This would be just. To conceal their criminal responsibility was a deceit. Deceit in the making of a contract is a basis for claiming a repudiatory breach of condition.

In short, the Government, far from claiming it cannot, for legal reasons, re-visit the question of the liability of the orders to pay for the abuse should be claiming it cannot, for legal reasons, avoid re-opening the issue.

(The title to this post is a reference to a phrase popular in France during the Napoleonic era of propaganda – “to lie like a bulletin”).

Irish consumers have had a right, since 1st May 2007 (the date of the coming into force of the Consumer Protection Act 2007) to sue (for example), a tour operator, or an airline which “overbooks”, not only for breach of contract, but, under Section 74 of the Consumer Protection Act 2007, in tort;

74.- …(2) A consumer who is aggrieved by a prohibited act or practice shall have a right of action for relief by way of damages, including exemplary damages, against the following:

(a) any trader who commits or engages in the prohibited act or practice;

(b) if such trader is a body corporate, any director, manager, secretary or other officer of the trader, or a person who purported to act in any such capacity, who authorised or consented to the doing of the act or the engaging in of the practice.”

“Overbooking” involves the sale of more “product” than a trader can supply (usually on the principle that some consumers will cancel). The Consumer Protection Act 2007 describes the practice in Section 55 (1) (l):

making an invitation to purchase a product without disclosing the existence of any reasonable grounds the trader may have for believing that the trader will not be able to supply, or procure another trader to supply, the product or an equivalent product at the price specified in the invitation, or to do so for a reasonable period of time or in reasonable quantities, having regard to the scale of any marketing or advertising of the product and the price specified (bait advertising);”

Of course, the dispute may eventually turn on whether “an equivalent product” was offered and, if accepted, supplied, but that factual dispute should be readily settled by the experience of the consumer; the consumer need only prove by comparison the discrepancy between the description of what was offered and the description of what was delivered.

A not insignificant element of the right to sue under Section 74 is that the right is not constrained by any arbitration clause in the contract with the consumer. In short, the right to issue proceedings is not precluded by the terms of Section 5 of the Arbitration Act 1980.

Reference has been made in this blog to the impracticality of litigants, generally, representing themselves.

In short, a lawyer is generally needed.

The same dictum applies in the conclusion of complex contracts.

In O’Mahony v Patrick O’Connor Builders Ltd. the parties agreed that the defendant do some building work for the plaintiff. When difficulties arose the parties agreed to the preparation of a report by an independent surveyor who would value certain works.

The defendant contended that the outcome of the valuation was binding on the parties.

(The plaintiff was denying that, and was asking the court to revisit the valuation issues).

As the court noted, there was not a clear contract in writing agreed between the parties. (Drawings and specifications were not sufficient to meet the need).

Consequently, through no fault of the valuer he had not executed his task on terms agreed between the parties. In particular, the valuer had made his report final without notifying the parties in advance; advance notice by the valuer before doing so had been a term of the agreement between the parties.

Consequently, the valuation was not binding and the issues, apparently settled by the valuation, were still at large.

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.