Any solicitor should reasonably be glum now. No office will escape the consequences of Ireland’s financial troubles and, ignoring runes, we need only read the recent record of our neighbour, the UK, to see what those consequences might be.

Let’s start with the straightforward stuff; Thomas McGoldrick, a solicitor, stole £1.25 million from a client left paralysed (from the neck down) by a traffic accident. The judge sentenced him to ten years in jail. McGoldrick’s firm acted for the client in his personal injury action. McGoldrick met the client once and when the compensation was lodged in the client account McGoldrick treated it as his own, driving a Mercedes and Jaguar with personalised number plates and sending his children to expensive prep schools.

In the UK, as in Ireland, theft like this is, effectively, a charge on all solicitors; the Law Society Compensation Fund has to make good the loss.

Any normal person might go off the rails on hearing news like this. Take Esther Cunningham for example. She was defending her cousin on a dangerous dog prosecution but had to be escorted from court after kissing a solicitor, swearing at an usher and insulting the prosecutor while “fortified” with brandy. To her credit her legal representative said of her; “The forcible kissing of a solicitor is something that has been difficult to accept”. Who, among her colleagues, would not agree?

Distraction, even while remaining on the rails, so to speak, could also be easily foreseen following on such troubles. Consider how readily a solicitor, raffling a house, could forget to get a licence to run a lottery. The then-President of the Law Society , Paul Marsh warned his colleagues against launching prize draws because he feared that, as the recession deepened and house prices continued to fall, more people might be tempted to establish prize draws. He also feared that they could be used to conduct mortgage fraud or for money laundering. He pointed out that anyone found guilty of running an unlawful lottery faces a maximum sentence of 51 weeks in prison and/or a fine of up to £5,000 under the Gambling Act 2005.

One wonders whether Mr. Marsh was not himself distracted. Did he not know what many of his members were then doing? They were bribing people to get work for their firms.
A report described the practice in relation to the “miners’ scandal” in these terms;

“…some law firms charged fees to the miners out of their compensation awards. This “success fee” was often charged on the ground that the miner had been introduced to the solicitor by a claims handling company or trade union that had charged the solicitor to send the case to them.”

Bribing middlemen for work is the first step to full-time, big-time bribery. Get a scruffy office in Tottenham and become a bagman for Halliburton, delivering £100 million in bribes to Nigerian politicians. That’s a business model any Irish property developer would cheerfully take up. In this case it was a solicitor.

Strictly, as a business model it lacks something; the bribes are going in the wrong direction. Christopher Haan, a consultant solicitor knew that. Despite charging his client, Mr Abela £1.4 million in legal fees (on a share purchase), Mr Haan was clandestinely also advising a Mr Baadarani, who was selling his stake in the Italian company to Mr Abela. Mr. Haan got £400,000 from Mr. Baadarani.
“This is not a case of a technical conflict of interest,” Mr Abela’s, counsel told the court, “but of an intentional preferment of one client’s interests over another.”
Mr Haan’s actions, he said, were negligent, deceitful and a breach of contract towards Mr Abela, adding that simultaneously advising the buyer and seller of a company implied fraudulent or negligent misrepresentation.
Mr. Haan may have known what Mr. Seldon, another solicitor, did not know; that you can be pushed into retirement against your will (and will need every cent you can get).

Or, powerful vested interests lodge a complaint with your Regulator and, despite their tendentious objectives (the complainants were the opponents of the solicitor’s clients) you just survive the trial your Regulator puts you through.

Here in Ireland, being a Republic we, in theory, are no respecters of persons. Oops! Not so, perhaps.

In any event Michael Ford a client of Michael Napier, a former President of the Law Society lodged a complaint with the Law Society about Napier. Napier had represented Ford in a long case against Exxon Mobil, but Ford discovered that Napier’s firm had also been acting for Esso, a wholly owned subsidiary of Exxon.

Ford was not pleased about this. How could he now know that Napier did everything he could to vindicate his interests?

The complaint went nowhere fast. Only when it went to the Scottish Legal Complaints Commission did Ford get a hearing. The Commission found that the Law Society’s investigation was a systemic failure.

Too bad.

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.”

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?

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.

Marc S. Dreier, a New York attorney has been arrested. He, among other things, (allegedly) passed himself off as, variously, representing persons he did not, being a person he was not and having authority he did not have.

The US authorities have taken a dim view of this and he is currently held without bail.

His firm on Park Avenue, New York, has filed for bankruptcy and the staff are fleeing the offices without their wages.

One wonders what would happen to him in Ireland.

What Bernie Madoff did has relevance to Ireland. Ireland is part of the globalised financial services industry through the Irish Financial Services Centre.

Some of the entities operating there have lost money by Bernie’s activities.

Significantly, Bernie had a British subsidiary in London to transact European business, presumably.

Assuming Bernie’s guilt; (he has, allegedly, confessed to running a pyramid, or “Ponzi” scheme), liability for these losses may fall not only on Bernie and/or his corporate creatures but on others also, under the following heads of claim;

A Breach of Contract;
B Negligence and Deceit;
C Breach of Fiduciary Duty;
D Conversion;
E Restitution;
F Statute:

BREACH OF CONTRACT

Bernie (“Bernie” includes any of his complicit corporate entities) received money under, in each individual instance, a contract. The place of the making of the contract will have varied from case to case. Each contract included express and, usually, implied terms. It was, undoubtedly, an express and, if not express, then implied term that he was to invest received money in asset backed securities. (For the purposes of this post, a definition of “securities” is not necessary; it is sufficient to know that Bernie’s appropriation of the money was not within contemplation).

Many contracts with Bernie were made by agents holding, apparently, discretionary investment powers. Agents are agents under a contract. Those contracts also would contain express and, usually, implied terms. The principal of those agents would have rights under the contract made by the agent with Bernie and also under the contract made with the agent by the principal. That principal might well be a “consumer” under Irish law (assuming that Irish law is the proper law of the relevant contract). Irish law could be the proper law of an agency agreement made by a foreign principal with an Irish resident agent.

There is an obligation on a person who undertakes duties under a contract, to deliver on those duties, irrespective of the level of skill and care actually exercised. If the contract contains an express or an implied term (as found by a court) that an agent, say, will invest, or cause to be invested, money in asset backed securities, there will be a breach of contract if he/she/it does not do this. Bernie, of course, is guilty of that breach. Any agent, from whom Bernie received the money of the agent’s principal, whose contract imposed such a duty will also be in breach.

NEGLIGENCE/DECEIT

Bernie was guilty of deceit. The evidence for this, currently, is his (alleged) confession. Presumably his financial records will corroborate this. Normally the heavy burden of proof to prove fraud militates against a finding of deceit in a civil action. Assuming access to the evidence against Bernie, that burden can be discharged and it would thereafter be otiose to consider allegations of negligence against him. More importantly, Bernie’s possession of the money delivered to him was never lawful; it was obtained fraudulently. Therefore he could not pass a good title to that money to any person to whom he, in turn, passed it. The money, in principle, may, therefore, be traced and, when traced, recovered from its subsequent holder/s.

There is, it seems, good evidence of negligence on the part of the agents from whom Bernie received much of the funds he allegedly misappropriated. Bernie divulged little of his investment strategy. He failed to reveal the exact securities in which he was, ostensibly, investing. To credit Bernie in those circumstances was a classic case of “buying a pig in a poke”. Furthermore, the return, offered by him, on the money was not, it appears, credible. The agents from whom he often received the funds were themselves professionals in the same field. They could not find investments in the markets returning the result that Bernie claimed for his “investments”. That is why they passed the money to him. That they believed him trustworthy is irrelevant. They knew, or ought to have known, that he was not, in fact, making his “returns” from investments in any known market. They were, in short, negligent.

BREACH OF FIDUCIARY DUTY

Bernie appears to have breached his fiduciary duties. The facts of each case require examination to determine the identities of the beneficiaries of the duty breached.

Currently, there are no publicly known facts showing breach of fiduciary duty by any agent whose principal has lost money, but that may change.

CONVERSION

Conversion is what a thief does when he steals. Essentially, that is what Bernie is reported as having confessed to. The remedy for conversion is the return of the stolen property, or, in default, damages.

RESTITUTION

A claim of restitution arises where, inter alia, a claim for money had and received can be made. Such a claim would lie against Bernie. The remedy for a claim of money had and received is the return of the property, or, in default, damages. Such a claim would also lie against an agent who believed that Bernie’s formula for generating his “returns” was, although effective, illegal. That they believed he was making the “returns” by trading on insider information, if true, is evidence of knowing receipt.

STATUTE

Financial management is, reputedly, a highly regulated field. Whether that is so in Ireland is already in doubt. The Madoff Mess may show the truth of the situation. That aside, Ireland’s financial regulatory laws make provision for claims in civil law for breaches of certain duties imposed by statute. The facts of each case will determine if these are available to investors to recover their losses.

Cerebral Palsy is not a disease; it is a condition.

It is relevant to lawyers when it is a consequence of negligence.

That negligence may have been an oversight in a maternity unit lasting, say, 30 minutes.

It is the new-born infant that is or will be injured by the oversight. Under the Statute of Limitations, time does not begin to run against the injured infant until the infant reaches its majority (18 years of age).

Thereafter, under current law, the infant has two years within which to issue proceedings in court. Thereafter, the delay in issuing proceedings is, in normal circumstances, a full defence to any claim.

In the event that such proceedings are issued and served, a defendant will typically apply to court to strike out the proceedings.

The defendant will not necessarily succeed.

Time only runs against a plaintiff who knows he/she has been injured (or could reasonably ascertain he/she has been injured) AND knows who or what has injured him/her (or could reasonably ascertain who or what has injured him/her).

A plaintiff whose hospital records show no evidence of error, effectively does not know who or what has injured him/her.

In Gough v Neary & Anor IESC [2003], Geoghegan J stated:

The plaintiff did not know that contrary to the false information given to her the hysterectomy was unnecessary until late 1998 or, indeed, some time after that when as a consequence of media coverage in relation to Dr. Neary and hysterectomies which he had carried out on a number of patients in connection with birth deliveries, she acquired the knowledge that the operation was unnecessary. That being so and in the absence of authorities, I would be of opinion that the plea of statute bar must fail.”

It is, therefore, critical that the hospital records be accurate and truthful. If they are not, and the plaintiff can show this, (the burden of proof will lie on the plaintiff), time will not begin to run until the plaintiff discovers the truth.

The Hollywood police have a perennial problem and must have long ago found the solution. Suppose Cary Grant had got drunk and stabbed his neighbour. Should the police arrest Cary Grant? But that was not his name. His name was Archibald Leach.

Who has committed the crime? Archibald or Cary?

In DPP v Thomas [2006] IEHC the High Court pointed out that, (like Cary Grant), the defendant had chosen to be known by a name other than his real name. Therefore, summonses issued against him in his false name were validly issued and were in time.

What of Kirk Douglas? He changed his name legally to Kirk Douglas, from Issur Danielovitch. (Presumably by deed poll). Has the ground become more certain in his case? Perhaps he does not have a double identity any longer?

In fact, for persons, unlike inanimate things or concepts, double identity is not the usual problem in law; it is the theft of identity. For inanimate things, in law, double identity is common; “public place�?, for instance, may have a different meaning in one piece of legislation compared to another.

Identity is not a simple thing. John Locke is credited with the first formulation of identity, in An Essay Concerning Human Understanding (1689), by reference to consciousness rather than the substance of soul or body.

For him, consciousness was memory. This has practical limitations. What of a person suffering from memory loss? If memory defines consciousness, which defines identity, how can we speak of “a person�? as suffering memory loss? (This memory loss is different to the memory loss encountered by the Flood/Mahon Tribunal).

More seriously, he denies that identity is related to the body. A body may change and we accept the person has not. A body may have a particular appearance and not reflect the identity of the person. (“Trading Places�? is based on this idea).

Possibly, identity is not coincidental with the person. A person may have several “identities�?. Some commentators deny that “identity theft�? is possible. In their view, what happens is the deception of a person or persons other than the person whose “identity�? was stolen.

I knew little of this show. Now, I learn, it portrays Jesus as a coprophiliac sexual deviant. At least, a group called Christian Voice says so. In that belief, it applied to a London magistrate for leave to prosecute the BBC for blasphemous libel. (The BBC had televised the show). The magistrate declined leave (I am curious as to why), and the group has now applied to the High Court in London for the same relief. If the group is successful the BBC could face a maximum penalty of life imprisonment. Considering that ITV is not even facing prosecution for what seems was a major fraud on the viewing public, there is little chance of the BBC going to jail. Blasphemous libel is a common law offence. The common law is part of the law of Ireland.