Newsletter January 2015

IN THIS ISSUE

Company Law 

Company law is braced for drastic changes under new legislation

Employment Law 

Disciplining employees: the punishment must fit the crime

Family Law 

Concealed assets by former husband result in massive pay out

Personal Injuries 

High Court rules damages for distress not recoverable in professional negligence claim

Supreme Court dismisses child’s appeal for playground injuries

FeltonMcknight_January 2015

Company Law

Company law is braced for drastic changes under new legislation

The company law regime in Ireland is set for a complete overhaul with the coming into force of the Companies Bill later this year.

The new legislation will consolidate the multiple pieces of legislation currently in force and endeavour to simplify this complex area of law.

Company directors are advised to familiarise themselves with the new Act and the fundamental changes that it is set to introduce.

Once the legislation comes into force, all limited companies will be required to convert into a new company type and obtain a reissued certificate of incorporation.

The default company form will be a simplified new private company known as an “LTD”. It will have one constitution instead of a separate Memorandum and Articles of Association. The LTD will also not be required to have an objects clause to limit the company’s activity.

The main alternative to an LTD is a Designated Activity Company (“DAC”) which closely resembles the current private company form, with two sets of constitution documents and an objects clause.

Current companies will be able to convert to an LTD once the legislation is enacted. Companies will have a period of 18 months from this date to decide whether they wish to be converted into a LTD or apply to register as a DAC.

If a private company limited by shares does not take any action over the 18 month period then it will be deemed to have become an LTD automatically and have a new deemed constitution.

It is anticipated that the vast majority of companies will convert to the new LTD regime. The benefits of the new regime include the need for only one director, the ability to dispense with an AGM, and no limiting objects clause.

Employment Law

Disciplining employees: the punishment must fit the crime

emplyment lawDisciplining employees can be a difficult process for any employer, especially in circumstances where the employee may not appreciate the gravity of their misconduct.

However, the law expects an employer to act reasonably at all times when reprimanding employees and the employer will be expected to carry out an investigation fairly and ensure that any action taken is proportionate to the misconduct.

These principles were endorsed in a recent decision of the Employment Appeals Tribunal concerning two former employees of a sweet factory who were dismissed for allegedly interfering with the recipe for Tic Tacs.

The former employees had loaded ingredients to a tankard manually instead of using the prescribed machines provided; – an action which the employer said distorted the recipe.

However the employees maintained that the machinery they were provided with was faulty and they did not want to fall behind in production.

Before the Tribunal, the former employees argued that the disciplinary procedure was flawed as they were not given an indication of the seriousness of the situation. They argued that the dismissal was disproportionate in the circumstances and did not accept that the product had been damaged.

The Tribunal agreed and made an award in favour of the claimants, stating that in such cases “the punishment must fit the crime”.

However in calculating the compensation to be awarded the Tribunal took into account the claimants’ contribution to the events leading to their dismissal and acknowledged that the employer had a right to consider interference with a recipe as serious misconduct.

The Tribunal made separate awards of €19,000 and €10,000 to the claimants.

The decision highlights again the necessity for employers to have clear disciplinary procedures in place and to ensure that any disciplinary measures imposed are proportionate to the misconduct.

Family Law

Concealed assets by former husband result in massive pay out

family lawDivorce proceedings can often be bitterly contested, especially in cases where a party has under declared their income or hidden assets in order to keep the benefit from their spouse.

Such circumstances can arise where one party has supervised the family finances and the other may be at a disadvantage as regards their knowledge of their former partner’s wealth.

The Supreme Court recently considered this in the case of AA v AB, a situation where a husband deliberately concealed from his former wife four assets with a total value of over €5 million.

The man’s conduct was described as ‘consciously and deliberately dishonest’ by the Court and it was ordered that the man pay his former wife a further €2.5 million over the divorce settlement.

Full and frank disclosure of assets is essential to the success of any divorce or separation agreement. Failure to do so may result in the marriage settlement being set aside if the dishonesty is uncovered, and the offending party may find themselves prosecuted for perjury.

Personal Injuries

High Court rules damages for distress not recoverable in professional negligence claim

personal injuryThe High Court has ruled that damages for upset, distress and inconvenience are not recoverable in an action for professional negligence.

In the case of Walter & Anor v Crossan [2014] IEHC 377 Mr Justice Hogan struck out the plaintiffs’ action against a firm of solicitors on the grounds that there was no basis in law for the recovery of damages for distress in such circumstances.

The case concerned the sale of land and construction of a property by the first and second defendants to the plaintiffs.

It was a condition of the planning permission that a sum of €33,000 would be paid by the defendants to the local authority for the provision of certain amenities.

However this money was not paid; notwithstanding this the solicitors for the builders gave confirmation to the plaintiffs that the money was paid before the completion of the sale.

The plaintiffs subsequently received notification from the local authority that the money was due and owing by them, and that they faced the threat of a criminal prosecution.

The outstanding monies were eventually paid by the builders two years after the plaintiffs first received the demands for payment.

The demands caused great distress to the plaintiffs, and they sought compensation for this on the basis that the solicitors had been negligent in representing to them that all payments due to the local authority had been settled.

The court found that there was no contractual relationship between the plaintiff and the solicitors but their relationship was such that they were owed a duty of care.

However upon reviewing the case law, the court held that in the absence of a contractual relationship, damages for distress, upset and inconvenience were not recoverable in the circumstances.

Personal Injuries

Supreme Court dismisses child’s appeal for playground injuries

The Supreme Court has dismissed an appeal from a decision of the High Court which found that Longford Town Council were not liable for the injuries sustained by a child in a playground.

The plaintiff in the case Ahmed v Longford Town Council fell off a swing and landed on a concrete surface, missing the protective rubber matting underneath the swing and causing him to fracture his arm.

In the High Court the plaintiff put forward evidence that the swing had been set 20 millimetres too low and this made it hazardous, as the low seat caused him to catch his foot on a downward swing and fall to the hard surface.

The plaintiff also argued that the hard surface was too close to the swing and the protective rubber matting should have been extended further.

However, experts for the Council also put forward conflicting evidence that all reasonable steps had been taken in the designing and manufacture of the swings to avoid injury.

In the High Court the trial judge accepted the Council’s evidence and noted that “You can’t avoid accidents to children, I know this as a fact, and it just can’t be done”.

The trial judge also placed significant emphasis on the fact that the playground had been in considerable use without prior incident.

The plaintiff appealed on the grounds that the judge had misdirected himself on the law and had failed to have sufficient regard for the plaintiff’s expert evidence. The grounds were given short shrift by the Supreme Court.

The Court held that although the plaintiff had put forward credible evidence, the trial judge was entitled to prefer the defendant’s evidence. The plaintiff’s appeal on the ground that the judge had misdirected himself in law was unfounded.

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