Ireland: Litigation Newsletter - April 2017

Contractual Good Faith

The Court of Appeal has overturned a High Court ruling that there was a general principle of good faith in Irish commercial contract law in its ruling in Flynn v Breccia (Unreported, Court of Appeal, 8 March 2017) [2017] IECA 74. Finlay Geoghegan J held that the shareholders' agreement was not the type of contract to which any general duty of good faith applied in accordance with established Irish authority. The judgment noted that Irish contract law does not recognise a general principle of good faith and fair dealing, although there are certain, limited categories of contractual relationships which imply a duty of good faith, such as partnerships and insurance contracts.

Litigation Funding

It is possible that crowdfunding in the above case will become an issue as it may be deemed that this type of litigation is in violation of the rules against maintenance and champerty. The current discourse on litigation funding is live in the pending Supreme Court case of Persona Digital Telephony Ltd v The Minister for Public Enterprise [2016] IESCDET 106. The Supreme Court reserved judgment in the case on 3 April 2017. We await their decision in the wake of the recent decision in SPV Optimal Osus Limited v HSBC Institutional Trust Services (Ireland) Limited & Others (Unreported, Court of Appeal, 2 March 2017) [2017] IECA 56). The Court of Appeal in Osus found that the High Court did not have to find that there was an intention on the part of the assignee to engage in the trading of litigation, whether professional or otherwise. It affirmed the decision of the High Court and it distinguished between the decision in Greenclean Waste Management Ltd v Leahy (No.2) (Unreported, High Court, Hogan J, 5 June 2014) [2014] IEHC 314 and (Unreported, Court of Appeal, 8 May 2015) [2015] IECA 97, stating that in Osus the plaintiff was not supporting the litigant, but purchasing the right to litigate the claim.

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Practice Direction - Payment of Costs on Account

HC71 - Payment on account of costs pending taxation

On 28 March 2017 the President of the High Court issued a new practice direction. Due to the long delays in the taxation of costs, the provisions of Order 99, rule 1B (5) have been highlighted by the President. The terms of the direction are as follows:

"I direct that in all cases where there is no dispute as to the liability for the payment of costs and in any other case which a judge thinks appropriate, an order may be made directing payment of a reasonable sum on account of costs within such period as may be specified by the judge pending the taxation of such costs. Such orders may be made on an undertaking being given by the solicitor for the successful party that, in the event of taxation realising a smaller sum than that directed to be paid on account, such overpayment will be repaid.

This practice direction shall come into effect on Monday, 24th April, 2017."

Legislation in the Pipeline

Judgment Limitation Periods

The Statute of Limitations (Amendment) Bill 2017 [Private Members Bill] which was introduced to the Dáil by Deputy Mick Wallace and has been debated at Second Stage and is listed for 12 April 2017 for official vote. The government has opposed the Bill which proposes to amend the Statute of Limitations 1957. It aims to bring the issue of Circuit Court and High Court Judgments into line with the most recent bankruptcy legislation, by reducing the lifetime of High Court and Circuit Court Judgments from 12 years to two years, and reduce the Statute of Limitations from six years to two years in instances where the collection and enforcement of civil debt by Banks and funds are concerned.

Changes to Consumer Insurance Contracts

The Consumer Insurance Contracts Bill 2017 has passed second stage. The Bill is based on the 2015 Report of the Law Reform Commission on Consumer Insurance Contracts. Minister Eoghan Murphy on behalf of the government stated that the government is supportive in principle of the Bill and willing to engage constructively.

There may be some repetition between the Bill and SI 74 of 2007, (Non-Life Insurance (Provision of Information) (Renewal of Policy of Insurance) Regulations 2007). It must be considered whether any provisions are likely to add unnecessary legal complexity and may result in higher litigation costs, as well as the work of the Cost of Insurance Working Group.

Developments at European Union level since the Law Reform Commission concluded the 2015 Report also need to be scrutinised. For example, the Insurance Distribution Directive was agreed in 2016. This directive will replace the Insurance Mediation Directive 2002/92/EC, which was transposed by the European Communities (Insurance Mediation) Regulations 2005.

Consultation will need to take place with the Central Bank, the Financial Services Ombudsman, the insurance industry and advocates for consumers. Further information can be accessed here.

IDD Consultation

The Minister for Finance has launched a public consultation on the Insurance Distribution Directive. Parties are invited to make submissions in relation to the potential impact for Ireland arising from, in particular, the discretions provided for in the Directive.

The Insurance Distribution Directive was published in February 2016 and must be transposed into Irish law by February 2018. It will replace the Insurance Mediation Regulations (IMR) which currently regulate point of sale insurance products and create a single market for the sale of insurance products. The new Directive aims to enhance consumer protection and extends the scope to include all sales of insurance products. It also seeks to identify and mitigate conflicts of interest in particular in the area of commissions and strengthen administrative sanctions.

The consultation period will run to 5pm on 2 May 2017.

Mediation Fits the Bill

The Mediation Bill 2017 has passed second stage and has been referred to Committee. The underlying objective is to promote mediation as a viable, effective and efficient alternative to court proceedings, thereby reducing legal costs, speeding up the resolution of disputes and reducing the stress and acrimony which often accompanies court proceedings. In this context, "mediation" means a facilitative voluntary process in which the parties to a dispute, with the assistance of a mediator, attempt to reach a mutually acceptable agreement to resolve the dispute. For a discussion on the practicalities of Mediation click here

Regulation of Credit Servicing Firms

The Consumer Protection (Regulation of Credit Servicing Firms) (Amendment) Bill 2017 [Private Members Bill] was introduced to the Dáil by Deputy Pearse Doherty and aims to protect borrowers who are parties to credit agreements in respect of which the owners of the credit are unregulated through the regulation of the owners of the credit.

Future of Civil Justice System

The Tánaiste and Minister for Justice and Equality, Frances Fitzgerald TD has issued a press release announcing that a Group, to be chaired by the President of the High Court Mr Justice Peter Kelly, would be set up to review and reform the administration of civil justice in the State.

The Group is to report within two years. The Group will make recommendations for changes with a view to improving access to civil justice in the State, promoting early resolution of disputes, reducing the cost of litigation, creating a more responsive and proportionate system and ensuring better outcomes for court users.

The remit is currently being finalised and it will take into account the body of work and range of initiatives already developed such as the 2010 Report of the Law Reform Commission on Consolidation and Reform of the Courts as well as the legal costs provisions of the Legal Services Regulation Act 2015 among others.

Status of Supreme Court Determinations

In Reaney and others v Interlink Ireland Limited (t/a D.P.D) (Supreme Court Determination, 30 March 2017) [2017] IESCDET 36 in a determination granting leave to appeal in relation to issues of lodgements under O. 22 r. 6 of the Rules of the Superior Courts and Courts Act interest, the Supreme Court gave guidance as to the precedential value of these determinations:

"The Court considers it desirable to point out that a determination of the Court on an application for leave, which is final and conclusive as far as the parties are concerned, is a decision in relation to that application only. The decision is whether the question, or questions, raised, and the facts underpinning them, meet the constitutional criteria for leave to be granted. Save in the rarest of circumstances, it will not be appropriate to rely upon a grant or refusal of leave as having a precedential value in relation to the substantive issues or in the context of different cases. Where leave is granted, any issue canvassed in the application will, in due course, be disposed of in the substantive decision of this Court.".

Brexit

Prime Minister Theresa May has officially triggered Article 50 of the Treaty of the European Union thereby commencing the UK's exit from the European Union. See links to the Prime Minister's letter to Donald Tusk triggering Article 50 and the Statement by the European Council (Art. 50) on the UK notification.

Crowdfunded proceedings exploring important issues surrounding Brexit have been commenced before the Irish High Court. This new set of proceedings is Maugham and others v Ireland and another (Record No. 2017/781 P). The plaintiffs are Jolyon Maugham QC and a number of UK politicians.

While the proceedings are being brought in Ireland, the applicants' explicit objective is to have the case referred immediately to the CJEU to rule on certain questions surrounding Brexit. While the draft pleadings seek a variety of reliefs, the applicants have indicated in the media that the main issues that they seek rulings on are:

Can the UK change its mind once it gives Article 50 notice and withdraw the notice?

Is Article 50 notice on its own enough to ensure the UK quits the single market, or will that require further notice to be given under the European Economic Area Treaty?

Has Ireland behaved illegally, along with the other EU Member States, either by refusing to negotiate with the UK until it formally gives notice under Article 50 (the argument being that giving informal notice was enough) or if that is not correct, by excluding the UK from European Council meetings held since the UK referendum on Brexit?

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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