Record Damages for Discrimination and Gender Pay Gap

Female army Captain, who served in the army for 9 years was awarded record damages for discrimination when all of her Captain colleagues (who were male) were promoted to Commandant after 9 years in accordance with the Defence Forces Regulations when she was on maternity-leave. The Captain first applied to the High Court to judicially review the decision of the Minister for Defence not to promote her to Commandant. The High Court found the Minister for Defence had breached the Equal Treatment Directive between men and women in not automatically promoting Ms Byrne to Commandant due to her maternity-leave.

As the Captain had left the Army, the Minister for Defence argued the Court should only consider the Captain’s loss of earnings due to the failure to promote her to Commandant in making an award. But the Court found it was foreseeable that Ms. Byrne would leave the army as a result of not being promoted as she was excluded from the promotion process due to her maternity leave. Ms. Byrne was not told that there was a Board being established to consider the issue of promotion. She was treated in a less favourable manner to her work colleagues who were all male. The Court found Ms. Byrne should receive damages for loss of earnings as a result of leaving the army which included pension loss, overseas duties for future duties, bringing it to a total amount of €412,397. This was doubled to take into account taxation to of €824,794. It also took into account her earnings in her new employment.

There are costly implications for employers who fail to treat male and female employees equally. The recent spotlight on the gender pay gap in broadcasting is bringing differences of payment for like work between male and female employees to the fore. Consultation on steps to be taken to address the Gender Gap has been opened today and is advertised in the Independent Newspaper. Employers should take note.

This is a summary of a recent decision and specific legal advice should be obtained in any situation. If you have any comment on this article or would like any further information, please contact Davnet O’ Driscoll at Davnet@amoryssolicitors.com

(c) August 2017


Auctioneer’s Liability for Sales Brochure Clarified

On 1st June 2017 the Supreme Court delivered a long-awaited judgment in David Walsh v Jones Lang LaSalle, 2017 overturning a previous decision of the High Court to hold an auctioneering firm liable in damages to a purchaser for inaccurate and misleading measurements contained in a sales brochure.  The decision will no doubt be welcome for auctioneering and estate agent firms alike as it places the onus firmly on purchasers to verify details in a sales brochure when there is a disclaimer contained therein.

The Facts

 Mr Walsh, who had 20 years’ experience in the property market at the time claimed his offer to purchase a two-storey north Dublin city centre commercial property was based on a “back of an envelope” calculation of the rent he would receive calculated on a value per square foot basis by reference to the measurements contained in the selling agent’s sales brochure. Mr Walsh’s offer was accepted and he completed the purchase of the property.  However it subsequently transpired that the actual floor area of the property was overstated by approximately 20% in the sales brochure.  Mr Walsh claimed damages for misrepresentation in tort against the auctioneering firm on the basis that it breached a duty of care to him to ensure that the sales brochure was accurate.

The Sales Brochure /The Disclaimer 

The following paragraph, disclaiming liability, was included in small print at the bottom of the front page of the Sales Brochure:

“Whilst every care has been taken in preparation of these particulars, and they are believed to be correct, they are not warranted and intending purchasers/ lessees should satisfy themselves as to the correctness of the information given.”

The agent sought to rely on the waiver in the brochure and in addition argued that irrespective of the sales brochure it did not owe a duty of care to the purchaser as there was insufficient ‘proximity’ or closeness of relationship between the two parties.

The High Court Decision

In 2007 the High Court found the auctioneering firm owed Mr Walsh a duty of care to ensure that measurements in the sales brochure were correct and found that the terms of the disclaimer were inadequate to exonerate the firm from liability.

The selling agent appealed the decision to the Supreme Court.

The Supreme Court Decision  

In finding that the auctioneering firm was not liable to Mr Walsh for economic loss caused by negligent misstatement three judges of the Supreme Court held that the selling agent did not owe a duty of care to Mr Walsh as Jones Lang LaSalle Limited did not assume responsibility for ensuring that the dimensions described in the sales brochure were correct.

The Supreme Court held that the High Court erred in law in holding that the disclaimer inferred that Jones Lang LaSalle assumed responsibility for details in the brochure and that the disclaimer was inadequate to exclude that liability.

Regarding the Sales Brochure and the disclaimer therein Ms Justice Laffoy of the Supreme Court stated:

“Where the person giving the information in so doing has expressly included a disclaimer in the brochure or advertisement, in my view, the core issue in determining whether a duty of care exists is whether the existence of the disclaimer by reference to its terms has the effect that there is no assumption of responsibility for the task for furnishing correct information on the part of the estate agent giving information to the recipient.”


“…. there was no assumption of responsibility on the part of JLL in relation to the task of furnishing the accurate internal measurements to Mr Walsh and that the consequence was that the law imposed no duty of care on JLL.”


The decision is a welcome clarification of the law in this area which up until now was uncertain. Prior to the Supreme Court judgment, it was not clear how far a selling agent’s duty of care to a purchaser reached in the sales campaign process or indeed how or to what extent a selling agent could disclaim that liability. Now it is clear that a selling agent will not be held liable for loss caused by incorrect particulars contained in a sales brochure where a waiver included.  Even where no disclaimer is made available the decision is authority for enabling a selling agent to avoid liability for inaccuracies contained in a sales brochure (even contained on a website) on the basis that it would not be ‘fair and reasonable’ to hold that a duty of care is owed given that a sales brochure is generally made publicly available.

Dated this 5th July 2017

Deirdre Farrell Amorys Solicitors, suite 10, The Mall, Beacon Court, Sandyford, Dublin 18

Tel: 01 213 59 40, Email : deirdre@amoryssolicitors.com

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Corporate Manslaughter Bill 2016

The Corporate Manslaughter Bill 2016 which is making its way through the Oireachtas at the moment creates 2 new criminal offences which will have significant impact on healthcare service providers. Firstly, an offence of “Corporate Manslaughter” is created when a person’s death is caused by gross negligence by an organisation. Corporate manslaughter can be committed by an “undertaking” which is a company, or corporate body, charity, government department or statutory body and can result in a large fine for the organisation. Secondly, management employees may be in addition charged with a criminal offence of “grossly negligent management causing death” in an organisation which has been convicted of Corporate Manslaughter. This occurs when a member of staff (“high managerial agent”) knew or ought to have known of risk of death or serious personal harm, and failed to take reasonable efforts to eliminate the risk which contributed to a death. This means a Director, Manager or Senior Official in a company or state body could also be charged and given a jail sentence in the event of a death.



Corporate Manslaughter occurs when an organisation which has a duty of care to an individual fails to meet the standard of care required to prevent substantial risk of death or serious personal harm, and to take all reasonable measures to anticipate and prevent risks. The size and circumstances of the organisation will be taken into account. The duty of care applies to all employers, subcontractors, owners/occupiers of property, producers of goods and service-providers. A Court will take a number of factors into account in assessing whether there is a breach of the standard of care required and specifically the management, rules, policies, allocation of responsibilities, training and supervision of staff, previous response of the organisation to other incidents involving death or serious personal harm, the organisation’s goals, communications, regulation, assurance systems and whether it is a licensee or contractor.


All management and officeholders should be aware that they might come within the definition of a “high managerial agent”. A “high managerial agent” is a Director, manager or officer of an organisation or someone acting in that capacity. A Court will consider the actual and stated responsibilities of the employee to establish if the employee should have known of the risk, and whether it is in the power of the employee to eliminate the risk. If it is not in the power of the employee to eliminate the risk, whether the employee passed information on the risk to others who can eliminate the risk in considering a charge of “grossly negligent management causing death”. Prosecutions for the 2 offences are on indictment in the Circuit Court. An organisation which is convicted of Corporate Manslaughter will be liable for a substantial fine. A “high managerial agent” convicted of “grossly negligent management causing death” will be liable for a fine and or term of imprisonment of up to 12 years.


In addition to other sanctions, a Court may make a Remedial Order to address the problems identified to prevent any recurrence and can consult with relevant trade unions and regulatory and enforcement authorities in considering the conditions. The organisation may be subject to a Community Service Order or Adverse Publicity Order where it is required to publicise its conviction for Corporate Manslaughter, the fine and any Remedial Order online or by other means. A “high managerial agent” who is convicted of “grossly negligent management causing death” can also be disqualified from acting in a management capacity for up to 15 years on indictment or subject to a fine of a maximum of 5 million euro and or up to 2 years in prison. The Court is entitled to enquire into the financial circumstances of an individual in setting the fine. If an organisation has been dissolved and reformed and the Court is satisfied the purpose of this is to avoid criminal liability, the Court can disregard the fact that an organisation has changed name.


This is a summary of the bill which has been published and specific legal advice should be obtained in any situation. If you have any comment on this article or would like any further information, please contact Davnet O’ Driscoll at Davnet@amoryssolicitors.com


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The Monkey Selfie Lawsuit in the US – how would the High Court of Ireland decide a similar case?

“Monkey Sees, Monkey Sues”

Last month a federal court* in San Fransisco, California held that a macaque monkey who took several selfies could not be declared the owner of the images’ copyright either under Unites States legislation or its Constitution.

The case

The case** arose out of a dispute between the animal rights organisation the People for Ethical Treatment for Animals (PETA) and wildlife photographer David Slater whose camera the monkey used to take the images.

In 2011, Slater went to a nature reserve on Sulawesi Island, Indonesia to study a family of macaque monkeys.   There, Slater set up his camera on a tripod and deliberately left the remote trigger for the camera accessible to the macaque who subsequently took two famous monkey selfies. The selfies were later published in a book by Slater’s publishing company, Blurb.


PETA issued proceedings on behalf of the monkey against Slater and Blurb seeking a declaration from the US federal court that the macaque monkey was the owner of the selfie and an order granting the assignment of the copyright in the images to the monkey.  The organisation also sought the equivalent of an order appointing it as trustee of the income generated by the images so that it could administer same for the benefit of all of the macaque monkeys on the reserve on the Indonesian island.


The photographer’s copyright not at issue

Slater’s entitlement to the copyright in the images was not at issue in this instance.   The US federal court had to decide as a preliminary issue (i.e. before a hearing of the full trial) whether an animal could own copyright in an image in the United States.  If the court held in the affirmative on that question (which it did not), the case could have then proceeded to a full hearing of the issues between the parties.


Decision in the United States

Unsurprisingly the US federal judge held that US legislation and its Constitution did not extend copyright protection to animals and dismissed the case accordingly.


In Ireland

Unremarkably the monkey and/or PETA are likely to be unsuccessful in any attempt by PETA to establish that the monkey owns the copyright in the images in Ireland.

The law of copyright in this jurisdiction is governed by the Copyright and Related Rights Act 2000 (“the Act”).  Section 23 of the Act states that an “author” of a work shall be the owner of copyright therein and section 21 of the Act states that the “author” means “person” who creates the work which in the case of a photograph means a photographer (i.e. the monkey in this case).  Whilst the Act does not specifically state that a person means an individual or a body corporate section 18 (c) of the Interpretation Act 2005 does so, unfortunately, the monkey and/or PETA on its behalf would not be successful in an argument under the Act.

Similarly an argument that copyright protection should be extended to animals on the basis that such a protection is an unenumerated right guaranteed by our Constitution is likely to fail as the relevant article (40.3) refers to “personal rights” of “citizens” and an animal is not a citizen.


But what about the photographer, would he own copyright in the image in Ireland?

If a court accepted a broader definition of ‘photographer’ to include Slater (as he purposefully left the camera with the monkeys and orchestrated the shot) Slater could have difficulty in proving that the image or work was “original”.

In order for copyright to subsist in a work in Ireland and in member states of the European Union same must be ‘original’ (section 17 (2) (a) of the Act and EU Directive 2001/29/EC) and a work is considered original if it is the result of the author’s own intellectual creation***.

Whilst the answer to this question could be the subject of an article itself, in brief, it is submitted that Slater would be in a weak position trying to assert copyright in the monkey selfies as leaving a camera amongst a family of monkeys would not be a sufficient expression of his intellect to render the images ‘original’.  If Slater used particular photographic techniques or computer software to manipulate the images in some way, it is submitted that he would be in a better position to prove originality in them and that he owned the copyright.

This case highlights the legal difficulties in establishing ownership of copyright in an image and how difficult it is for a monkey to make it in the media industry.  Great story.


Deirdre Farrell, solicitor AITI Chartered Tax adviser, Amorys Solicitors, Suite 10, The Mall, Beacon Court, Sandyford, Dublin 18 deirdre@amoryssolicitors.com, tel 01 213 59 40

© February 2016


NB: In publishing the above image we are availing of the ‘fair dealing’ exemption from infringement set out in section 51 of the Act.



* A federal court in the United States, is a court that has jurisdiction to decide on claims that fall to be determined on the interpretation of the laws, treaties or Constitution of the United States as opposed to internal State laws.

** US District Court, Northern District of California, San Fransisco Division, case reference 15-cv-4324-WHO

*** This is accepted as the harmonised definition of originality in the European Union -see Infopaq International A/S –v- Danske Dagblades Forening C5-08 Court of Justice of the European Union (4th Chamber)


Amorys hosts Official Visit of Legislative Affairs Office of Shanghai Municipality People’s Government

Amorys Solicitors, the Judiciary and the Courts Service recently hosted a visit by a delegation of 7 senior legal advisers and researchers from the Legislative Affairs Office of the Shanghai Municipality People’s Government.

The purpose of the Chinese visit was to meet members of the Judiciary and lawyers at Amorys and to discuss and observe the availing of public law remedies against the Irish State under Irish law, in particular judicial review.

The delegation, led by Mr Liu Ping Vice Director of the Legislative Affairs Office of the Shanghai Municipality People’s Government, was welcomed by the Honorable Mrs Justice Susan Denham, Chief Justice of Ireland (pictured below).

Over the course of the morning the delegation was taken on a guided tour of the Four Courts led by highly knowledgeable and entertaining researchers from the Courts Service and members also observed several courts in session after having been welcomed by the presiding Judges.

The delegation then met the Honorable Mr Justice John MacMenamin (Supreme Court), the Hon. Mr Justice Peter Charleton (Supreme Court), the Hon. Mr Justice Patrick Mc Carthy (High Court)  Judge John O’Neill, District Court and Noel Rubotham, Head of Reform and Development, Courts Service, and when a lively discussion took place over a light lunch.  Judge Charleton surprised many by  engaging in communication with the Chinese visitors in excellent mandarin.

Mr Liu Ping advised that legal reforms are under active consideration in Shanghai and his team have been tasked with the objective of exploring western legal systems including the Irish common law system.

Sharon Scally, Davnet O’Driscoll, Deirdre Farrell and Wendy O’ Brien of Amorys Solicitors would like to thank the Judiciary, Noel Rubotham and Elisha D’Arcy, Protocol Officer, Courts Service for hosting what was a very enjoyable and informative event.


Back row (from left to right): Davnet O’Driscoll, solicitor Mr Wang Feng Ping, Division Chief, Mr Wu Wen Tao, Division Chief, Mr Xiang Ye Ping, Researcher, Elisha D’Arcy, and Mr Qian Yan Qing, Researcher

Front Row (from left to right): Deirdre Farrell, solicitor, Sharon Scally, solicitor and principal Amorys Solicitors, The Honorable Ms Justice Susan Denham, Chief Justice of Ireland (Supreme Court), Mr Liu Ping, Vice Director, Ms Shen Zhu Wen, deputy researcher and Ms Tang Jia, translator

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Recent Supreme Court Ruling re Repossession Proceedings relating to Residential Property

Lender cannot repossess where breach of the moratorium required by the code of conduct on mortgage arrears, supreme court says


The Supreme Court has said failure to comply with the moratorium provisions of the Central Banks Code of Conduct on Mortgage Arrears by a lender can prevent a home being repossessed in a recent decision of Irish Life and Permanent Plc, Gemma and Kevin Dunne and Dylan Dunphy [2015] IESC 46.

The Supreme Court heard appeals of two cases against Irish life and Permanent Plc which were referred by the High Court Judge. The Dunnes had defaulted on repayments due to Irish Life and Permanent Plc and it appeared that Irish Life and Permanent Plc were entitled to recover possession of the property. As the Dunne were not legally represented and did not enter an appearance to the proceedings, there would be no enquiry that the lender had complied with the Code of Conduct on Mortgage Arrears. Judge Hogan referred these 2 cases on appeal due to various different views taken by High Court Judges on the question of legal status and consequence of compliance by lenders with the Code of Conduct on Mortgage Arrears in relation to repossession.

The Supreme Court was asked to consider:-

  1. As there is no sanction for failure by a lender to comply with the Code of Conduct on Mortgage Arrears does non-compliance with the Code affect a lenders entitlement to obtain repossession of a property
  2. If a lender has not complied with the Code of Conduct on Mortgage Arrears, depending on the type of breach can the Court refuse to make an Order for repossession and can any breach be rectified by a period adjourning or postponing the proceedings.

The Supreme Court said that regulated financial institutions must obey the Code of Conduct on Mortgage Arrears which forms part of the law pursuant to Section 117 (1) of the Central Bank Act 1989. When a lender is applying for a Court order for repossession of a private residence of a homeowner the Court may have to consider a situation where a lender is in breach of the Code. The Court said if an application for repossession brought by a lender is in clear breach of the moratorium that a Court could not aid the lender in these actions which are clearly in unlawful and in breach of the Code of Conduct on Mortgage Arrears and could not make an order for repossession in those circumstances. However the Court clarified that it will not have a role in deciding whether particular proposals should be accepted by the lender or in formulating a lenders policy in relation to mortgage arrears and in applying these or assessing as to whether these are reasonable as this is not its role. All proceedings for repossession should now contain a statement that the proceedings were commenced outside of the moratorium period. If the moratorium does not apply then this should be explained and a Court can consider what evidence it needs to be satisfied that there was no breach of the moratorium by a lender.


This is a summary of a recent decision and does not constitute legal advice. If you require any further information in relation to this matter please contact Davnet@amoryssolicitors.com.


Update on Claims under Payment Protection Policies

Consumer misled in purchasing insurance policy where commission and connection with insurer not disclosed, Davnet O’Driscoll advises

Mr. Untoy who is a consumer took out 3 loans from GE Money who offered him a payment protection policy for the loans. GE Money acted as an intermediary for the underwriter Lighthouse which offered the insurance. Lighthouse was also owned by the parent company of GE Money.

Mr. Untoy was a public sector employee at the time he took out the 3 loans from GE Money. He was not aware at the time that commission was paid to GE Money on the purchase of each policy for his 3 loans. Neither was he aware that GE Money and Lighthouse were related companies. He subsequently discovered the policy sold to him was not suitable for public sector employees as he was not eligible to obtain any benefit under the policy. He then sued GE Money for negligence, misleading him, failing to disclose the relationship with the underwriter and that it was earning commission on the payment protection policies.

In the District Court, GE accepted that they had a duty to act honestly, in good faith in their dealings. Mr. Untoy said he did not realise that the Insurer and GE were the same entity. He was surprised to learn that GE earned a commission on the sale of the payment protection insurance as this was never disclosed to him. He said had he known that he was paying extra for this he might have gone to the insurer directly or looked for other options.

There is no express obligation for GE Money to disclose its commission or the amount of any commission on the sale of an insurance policy. However there is an obligation on an insurance intermediary to disclose any connection between the provider of a loan and the provider of insurance cover for a loan, under regulation 19(1)(d) of the Insurance Mediation Regulations 2005 (SI 13/2005).


The findings of the District Court were appealed by way of case stated to the High Court.

The Irish Court considered the regulatory regime in the UK which is different to the Irish regime. In the UK there are a number of rulings considering the fairness of a debtor creditor relationship and situations where commissions payable are not disclosed. The UK Supreme Court has found in one case that the non-disclosure of a 71.8% commission made a contractual relationship unfair for a consumer under a statute.  A reasonable person given that information would be bound to question if the insurance represented value for money.

GE Money admitted that they had not complied with the requirement to inform a customer in advance of entering into an insurance contract of the connection between the lender and insurance provider.  In Mr. Untoys case, the Judge found that where companies are related and one is paying commission to the other, this information should be disclosed to the consumer, since the consumer may not realise that he is in effect paying on the double to related companies. It is at that point the size of the commission being paid becomes relevant. The Judge found that the conduct of GE Money amounts to a misleading commercial practice and Mr Untoy is entitled to compensation for this as a result.

The amount of damages to be awarded to Mr. Untoy have not yet been measured, and we will update you when this has been decided. Following this ruling insurance intermediaries should review their procedures for selling insurance policies and practices. Further training may be necessary for staff.


If you have any comments on this article, or would like any further information on the responsibilities of insurance intermediaries, please contact Davnet O’ Driscoll at Davnet@amoryssolicitors.com.


Consumer Protection (Regulation of Credit Servicing Firms) Act 2015

The Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 (“the Act”) came into force on 8th July 2015 and has the effect of ensuring that relevant borrowers whose loans are sold by a regulated entity to a third party maintain the same regulatory protections they had prior to the sale.

In particular, the Act ensures that the rights available under the Consumer Protection Code, the Central Bank’s Code of Conduct on Mortgage Arrears and the Code of Conduct for Business Lending to Small and Medium Enterprises (“the Codes”) are available to ‘relevant borrowers’ after their loan has been transferred to a third party, where, prior to the commencement of the Act, same would not have been available.

In brief, a ‘relevant borrower’ is a natural person within Ireland or a small or medium sized enterprise (“SME”) being an enterprise which employs fewer than 250 persons and which has an annual turnover not exceeding €50m and/or an annual balance sheet total not exceeding €43m.

Frequently when a loan or a portfolio of loans is sold by a bank/ lending institution, it is sold to an investment company that is not in the business of administering or managing loans.  Usually, investment companies outsource the administrative duties attached with servicing loans acquired (such as notifying a borrower of a change of interest rates, sending statements, dealing with complaints, managing or recovering the loan, etc) to another company or organisation.  The Act defines that other company as the ‘credit servicing firm’ (“the CSF”) and requires that entity to have an authorisation from the Central Bank of Ireland (“the CBI”) or other relevant bank.  If the investment company administers and services the loan itself, the investment company is treated as the CSF under the Act.  An authorisation from the CBI requires high service level standards to be met when interfacing with the relevant borrower and robust governance arrangements to be in place. Further details of the high service level standards and arrangements may be viewed here.

The Act goes some way towards protecting consumers, SMEs and individuals borrowing in their private capacity and is no doubt a welcome introduction for those whose loans have been transferred from established financial institution in Ireland to a relatively new non-resident investment company.
If you have any queries about the application of the above legislation to your business contact Deirdre Farrell, solicitor and AITI Chartered Tax Adviser, deirdre@amoryssolicitors.com, tel 01 213 59 40.

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Employees in Clerys Liquidation

When a provisional liquidator was appointed to Clerys, that evening employees were informed that the store was being closed. As the business is being liquidated where does this leave the employees?

When a business is being liquidated, the employees are automatically dismissed when a Court order is made to wind up the company. The employees become preferential creditors under Section 621 of the 2014 Companies Act. This means the employees rank behind any secured charge holders (normally banks) who have a first charge over the property and assets of the company. Where there are sufficient funds to pay the secured charge holders fully, there may be funds left to pay the preferential creditors who will then receive some or all of the monies owed. The Companies Act provides for payment of arrears of wages or salary for employees for a period of 4 months before the date of appointment of a liquidator, provides for payment of holiday pay, payments to an employee who is ill and the payment of the company’s and employee pension contributions which cannot exceed more than €10,000 in a case of any one claim. Payments to preferential creditors will be reduced pro-rata where there are insufficient funds left to pay all of the preferential creditors.

If there are funds left for the preferential creditors, Clerys staff can seek to recover the payments set out above.

However, if there are no funds or limited funds for preferential creditors the Protection of Employees (Employer’s Insolvency) Acts 1984-2004 apply to protect employees (who are insurable under the Social Welfare Acts) in the event of an employer’s insolvency. The Insolvency Payments Scheme provides for limited payments for qualifying employees from the Social Insurance Fund, and it covers payments due to employees in liquidations, receiverships, bankruptcies and employees in Ireland working for employers who become insolvent within the EU. There is a loophole in the legislation in that it does not cover companies which cease trading and are insolvent but are never formally wound up.


The Social Insurance Fund will pay:

  • Up to 8 weeks arrears of salary limited to €600 per week.
  • Maximum 8 weeks statutory notice pay
  • Maximum 8 weeks holiday pay
  • Statutory redundancy pay for employees with over 2 years continuous service
  • Payments in respect of employment rights, claims for unfair dismissal, discrimination, and other claims relating to a period of 18 months prior to insolvency. The remuneration recovered is however limited.


TUPE or the EC Protection of Employees (Transfer of Undertakings) Regulations 2003  

Media reports indicate that there were a number of bidders for Clearys at the time of its sale and that some of these planned to keep the store open and trading for a further 12 months, with scaled down retail activity within the store. If another option had been taken up, the employees may have benefited from TUPE.

TUPE applies if a business or part of a business is sold and transferred to a new owner and retains its identity. In such circumstances all employees of the business automatically transfer with the business to the new entity and are protected against dismissal. Furthermore the terms and conditions of their employment are preserved on the transfer except for their pension rights. The new owner may make redundancies among staff after the transfer due to economic, technical and organisational reasons under the regulations, however, this exception will be carefully scrutinised by the tribunals. If a new employer is making staff that transferred redundant under this exception, the new employer is bound to pay the employees being made redundant their statutory redundancy, salary/wages for the contractual notice period and any ex-gratia redundancy payment which may become payable through a collective agreement or custom and practice. Usually on a sale of a business the parties provide for arrangements between the transferor and transferee to apportion liability for payment of staff redundancy and notice.

Cleary’s staff may be paid their legal entitlements by the company or by the Minister for Social Welfare under the Redundancy Payment Scheme. TUPE does not apply in an insolvency or bankruptcy situation unless the sole or main reason for bankruptcy or insolvency of the Transferor is the evasion of employers’ legal obligations to staff under TUPE.


This is a summary of recent developments and specific legal advice should be obtained. If you would like to discuss any aspect of this further, please contact Davnet@amoryssolicitors.com.


Examinership Explained

At present all applications for examinership must be made to the High Court.  With a view to reducing costs and providing greater accessibility for small private companies to the examinership process section 2 of the Companies (Miscellaneous Provisions) Act 2013 was enacted on 24thDecember 2013 and provides that a small to medium sized company may apply to the Circuit Court to instigate the examinership process. Section 2 is however subject to a ministerial commencement order which has not yet been passed.


Small companies are those that satisfy two out of the following three conditions:

1.         Balance sheet not exceeding €4.4million;

2.         Turnover not exceeding €8.8million; and

3.         Number of employees not exceeding 50;


What is examinership?

Examinership is a court supervised rescue process which is designed to help companies recover from insolvency. The principal rationale behind examinership is to allow a company that is experiencing financial difficulties a period of protection from creditor action during which a third party (the Examiner) has an opportunity to examine the affairs of the company and, if there is a reasonable prospect of the survival of the company and all or part of its undertaking as a going concern, to formulate proposals for a scheme of arrangement to facilitate such survival and save the jobs of its employees.


When will a court appoint an examiner to a company?

Briefly put, if satisfied that an insolvent company and the whole or any part of its undertaking has a reasonable prospect of survival as a going concern a court may appoint an examiner. The company must prove it is unable to pay its debts at the time of the application to appoint an Examiner.  The company does not however need to be insolvent to fulfil the necessary criteria, a court may take account of a future event which is likely to have an adverse effect on the company’s ability to discharge its debts.

An Examiner will not be appointed where a receiver stands appointed for a continuous period of three days or more.  Furthermore the existence of a winding up petition does not in itself prevent the appointment of an Examiner.


How does a company go about applying to the Court to appoint an examiner?

An Examiner is appointed to a company on foot of a petition brought before the High Court*. The petition must be supported by an affidavit (a written document sworn by the applicant on oath) and must be accompanied by an independent accountant’s report.  The independent accountant’s report must put basic information before the court to show whether or not proposals for a scheme of arrangement would offer a reasonable prospect of the survival of the company and all or part of its undertaking as a going concern.

* There is provision in the Companies (Miscellaneous Provisions) Act 2013 to permit a company to apply to the Circuit Court in the circuit of the company’s registered office but at the date of writing the relevant commencement order has not been signed by the Minister for Innovation, Trade and Employment.


Practically speaking what does “court protection” mean for the Company?

The practical effect of “court protection” for a company is that the company is effectively immune from creditor action. This means the following:-

No proceedings may be taken or resolution may be made to wind up the company during the period of protection;

  1. No receiver can be appointed over secured assets of the company;
  2. No steps may be taken to pursue a guarantor of that company’s debts during the protection period; and
  3. No steps can be taken to repossess goods of the company or to enforce a judgment of a court during that timeframe.


What is a Scheme of Arrangement?

As stated an Examiner’s main function is to arrange a formal scheme of arrangement between the company and its creditors and members which will facilitate the survival of the company and the whole or part of its undertaking as a going concern.

An Examiner is obliged to prepare a report outlining proposals for a scheme of arrangement and to convene a meeting of each class (see below) of creditors and shareholders to consider same.  The Examiner is obliged to convene the said meetings within 35 days of his or her appointment however typically this timeline is extended.

A scheme of arrangement frequently involves a new investor acquiring all or substantially all of the shareholding in the company together with a write down of the company’s debt across a range of classes of creditors. In certain circumstances, third party investment is not required.

In his report, the Examiner must divide the company’s creditors and members into various classes (e.g. unsecured creditors, leasing creditors, retention of title creditors, floating chargeholders, fixed chargeholders, Revenue Commissioners, contingent creditors, etc., preferential shareholders and ordinary shareholders) and treat each class equally.

I am a creditor of a company in examinership, will I be compelled to accept a Scheme of Arrangement ?

Provided that at least one class of creditor and member (see above) votes in favour of accepting the Examiner’s proposals, the Examiner may proceed to seek court approval sanctioning his scheme of arrangement thereby making it binding on dissenting creditors and members. The voting by creditors at their meetings is by a majority in number representing a majority in value of the claims represented at that meeting. (e.g. a secured creditor of €100,000 could have 100 votes and a secured creditor of €1000 could have 1 vote)


What does the board of directors need to consider before applying for examinership?

The overarching principal of examinership is to give an insolvent company some time during which it is uninhibited by creditor action to come to a scheme of arrangement which is agreed to by a majority of creditors (voting in number and value) which would be more beneficial to them then in a winding up or liquidation situation.  If the directors doe not believe that any scheme would be accepted by a majority of a class of creditors and members (see above) the directors should not proceed to examinership as to do so would significantly reduce the funds available to creditors.

If a scheme of arrangement is not agreed to by a class of  creditors or members or approved by the Court it is important to note that the company will most likely go into liquidation.  In this scenario the costs of examinership are paid in priority to all other debts of the company, thus minimising the amount available for the creditors.  Usually costs of the examinership process are significant and this could lead to there being no funds left to pay the creditors.


What happens if the Scheme of Arrangement is approved?

The company proceeds with business as per the scheme of arrangement.


When does Court Protection end?

The date on which the scheme of arrangement is approved or disapproved, as the case may be.  If at any stage the Examiner believes that there is no prospect for the survival of the company and all or part of its undertaking as a going concern, he or she must apply to be discharged and to have court protection terminated.


What happens if the examinership process fails?

If the examinership process fails the company will most likely be placed into liquidation or the company’s secured creditors will appoint receivers to the secured assets.

For more information on the above please contact Deirdre Farrell, solicitor and AITI Chartered Tax Advisor (CTA), Amorys solicitors, Suite 10, The Mall, Beacon Court, Sandyford, Dublin 18 Tel. No. 01-213 59 40


© February 2014