Month: May 2011

What?!

The slow and painful collapse of the SMDF continues to surprise, if not delight. Today, a letter from the Chairman of the SMDF raises more questions than it answers. Three sentences jump off the page:

We embarked on a strategic review during 2010, with the assistance of significant outside expertise. It was recommended that we provide indemnity in 2010/11 and then sell our book of business.

When the London insurance market became aware, earlier this year, of the possibility of a Master Policy being introduced for Irish solicitors, any interest in the [SMDF]’s book evaporated.

What the letter diplomatically omits is the identity of the party who made the London insurance market aware of the possibility of a master policy being introduced. It was, of course, the Law Society.

The result? The Law Society now proposes to impose a €200 annual levy on all solicitors, not just members of the SMDF, for at least 10 years. (The SMDF letter raises the prospect of a 15 year bailout.)

The Law Society and the SMDF have already been criticised for seeking a bailout from Society members rather than SMDF members. But, it now transpires, the SMDF found a solution to its problems which might not have involved calling on all solicitors to bail it out.

The Law Society went public with its (still!) undeveloped idea of a master policy, depriving the SMDF of the opportunity to sell its book. The Law Society will now impose a new solution, at significant cost to its own members.

I might not be the only recipient of this letter to have exclaimed: “What?!”

There is nothing super about these injunctions

The unfolding superinjunctions scandal in the United Kingdom is one of those legal stories that has gripped the media, broadsheet and tabloid alike. Much of the coverage now focuses on the fact that social media tends to make a superinjunction redundant.

An injunction is an equitable remedy and therefore a number of specific rules (maxims) apply when a judge considers whether to grant one. One such maxim is that equity will not act in vain. Mr. Justice Clarke summarised the position in a recent Irish case involving an attempt to force through the sale of a property where the purchasers had no ability to pay.

It has often been said that equity will not act in vain. A court should, therefore, be reluctant to make an equitable order where there is no reasonable prospect of the order concerned being complied with. I should add one qualification to that statement. There obviously may be cases where persons may simply decline to obey an order of the court. The fact that a party might be most unlikely to obey a court order could not, in my view, be a reason for the court not making the order in the first place. However, where it is clear on the evidence that a party would not, in fact, be able to comply with a court order, then a court should be most reluctant to make such an order.

For superinjunctions of the type currently in the news, there is no reasonable prospect of the orders being complied with. But this results from the fact that Twitter users, for example, are unlikely to obey the order, rather than being unable to obey it. Nevertheless, the issue of enforceability is significant. Proposals to impose editorial moderation on social media are somewhat silly and, as with many of the measures adopted to tackle illegal filesharing, doomed to fail.

As the Guardian commented in its editorial yesterday:

The case is, on the face of it, not a terribly attractive one for arguing either the cause of freedom of speech or for the supremacy of parliament.

However, the issue is not about the peccadilloes of a premiership footballer and the same principles will apply in far more serious circumstances.

What if some people on Twitter decided to name rape victims, or publish the current identity and whereabouts of Mary Bell, the child killer was who has, since 2003, been protected by a court order?

On the other hand, the existence of superinjunctions first came to public attention during the remarkable Trafigura affair in 2009 when the Guardian was prohibited from reporting on a question asked in the British Parliament. The case was something of a nightmare scenario for those with an interest in open democracy and press freedom.

The UK controversies inevitably involve debate on the merits of introducing a privacy law or reforming defamation law. What about this jurisdiction? Reforms have recently been made to our defamation law and while they were to be accompanied by a “deeply flawed” privacy law, that initiative has stalled.

The Privacy Bill 2006 proposed that a court could, in a privacy action, make an order prohibiting a defendant from doing anything that the court considers violate the privacy of the plaintiff. It also allowed for wide powers to control media reporting of privacy actions. It certainly appeared wide enough to allow for superinjunctions. Eoin O’Dell outlined the conundrum that the Bill would present the media with when coupled with the Defamation Act 2009.

[The Bill] has raised the spectre the defamation gagging writ of old simply being replaced by a shiny new privacy gagging writ. One aspect of the two Bills together puts journalists into a potentially invidious situation. To be able to rely on the defence of reasonable publication in a defamation action, one of the factors which the court will take into account is the extent to which a reasonable attempt was made by the journalist to obtain and publish a response from the person who is the subject of the article.

However, a journalist who makes such contacts in advance, now runs the risk of precipitating a privacy action from that person.

The journalist is now potentially damned by the Privacy Bill for contacting the subject of the article, and damned by the Defamation Bill for not doing so.

Of course, we don’t know if there are any superinjunctions in force in Ireland because, by their nature, the media is generally prohibited from reporting even their existence. Given that Ireland is such a small community, however, it seems probable that word of superinjunctions would quickly leak out. In addition, as noted by Flor McCarthy:

The constitutional requirement in this jurisdiction that justice must be administered in public would be a high hurdle for an applicant to overcome; though maybe we just don’t have the right celebrities!

Nevertheless, it is not inconceivable that such draconian injunctions could be issued in Ireland. After all, the ongoing banking crisis in Ireland has been accompanied by an astounding level of secrecy. The Credit Institutions (Stablisiation) Act 2010, a remarkable piece of legislation which should be far more controversial than it currently is, baldly provides:

The Court may order that any application under this Act, or any part of such an application, shall be heard otherwise than in public or may impose restrictions with regard to the disclosure in open court, publication or reporting of any material that might be commercially sensitive.

This is a very broad provision and was relied on almost immediately after the Act was passed. It was quite clear at the time this Act was first used that the parties hoped that the media would not be aware of the proceedings. Could a judge order that an article such as that in the Irish Times not be published on the grounds that the fact of the application itself was commercially sensitive?

There may well be grounds for the use of draconian court orders on occasion but it must be considered that the parties most likely to seek them are large corporations and wealthy individuals. As Mark Stephens, a high profile media lawyer, commented:

They are almost discriminatory justice. Not a single woman has taken out a super injunction and as a result of that, it is only the men. Invariably they are rich men because it costs between £50,000 and £100,000 (€56,000 and €113,000) to get a superinjunction.

Which is more valuable: the State brand or €300,000?

The Your Country, Your Call saga continues. The Irish Times has reported that Martin McAleese, the “initiator” of the competition, has said that Government funding is no longer needed. I have written about this strange competition a number of times (1 ¦ 2 ¦ 3 ¦ 4) but Simon McGarr posted an update yesterday which puts the latest news in context. He concludes by reference to the initial request for funding:

[T]he serving President’s husband contact[ed] the Taoiseach of the day about paying public money to a private company whose activities he was promoting.

Even I stopped for a moment when I read that.

This is the core of the issue with YCYC. It was run by a private company set up by a range of corporate enterprises, many of whom could benefit from the development of the winning proposals. To the public, however, it was presented as a quasi-official, State undertaking.

The “AIB/Cisco Ideas Campaign” would be just another prize giveaway with a winning slogan rather longer than the traditional 10 words. YCYC, on the other hand, was infused with official symbols.

The logos and names of its corporate organisers were given far less prominence than is usually the case, while the President and her husband were thrust to the forefront of the initiative. It was presented as a national competition with Government backing (which has now evaporated) and which displayed, at the heart of its logo, the national symbol.

As an aside: it was for that reason that one of my freedom of information requests was for information on any requested made by YCYC for authority to use an emblem resembling one registered by the State under Article 6ter of the Paris Convention. I also sought information of whether the Government considered whether such authority was required.

ie2-th — One of a number of harp images registered as State emblems

I got no information under this category, which suggests that the issue was never raised.

It all boils down to one fact: the State brand was used to promote a private enterprise which appears to have quite a pot of cash behind it. And it’s incredibly easy to gain access to that brand, once you go about it the right way.

InjuriesBoard.ie: “lawyer-free zone”, or competitor?

Officially, the Personal Injuries Assessment Board (the “Board”) is just another boring statutory body performing a function on behalf of the State. However, the Board has often exceeded that mandate since its creation by acting as a vocal critic of the legal profession. Arguably,the Board also operates as a commercial entity in competition with lawyers, albeit a very strange form of competition where the aim is to deprive lawyers of fees rather than to earn those fees for itself.

I mentioned recently that a wide range of restrictions apply to advertising by solicitors, despite the fact that the Board advertises in a manner not dissimilar to the personal injury solicitors familiar to viewers of UK television. (An example of the latter is below; I have been unable to find InjuriesBoard.ie ads online.)

Indeed, after a few years of operating under its official name, the Board began to style itself InjuriesBoard.ie, a form of branding very much in line with what one might expect from an online claims agency.

An online claims agency like Claims.ie, perhaps? In 2010, InjuriesBoard.ie made a complaint to the Advertising Standards Authority of Ireland under its self-regulatory code on the basis that users might believe Claims.ie was the website of the Board. It also complained that it was not clear who was running Claims.ie or from where. The complaint was upheld, though Claims.ie did not respond to it. The ASAI referred the case to the National Consumer Agency, presumably with a view to enforcement action under the Consumer Protection Act 2007.

Part of the Board’s complaint related to Google adwords, which really is a matter for the courts (in fact, it is very much a live issue for the courts). The Board was correct in stating that it is unclear who is behind Claims.ie, but contact details are provided. The site appears to be run by a company called Claims Ireland Limited but there is no company registered in Ireland with that name (there are two registered business names for “Claims Ireland”). So, the operator may have some difficulties under the Companies Acts or related legislation, which is a matter for the Companies Registration Office and the Director of Corporate Enforcement. Nevertheless, the Board was the organisation to take up the complaint and its choice of forum was the relatively powerless ASAI.

When making a complaint to the ASAI, the complainant must indicate if there is a commercial or other interest in making the complaint. For consumers, the answer will be no. A practical difference in treatment is that a consumer complaint is confidential, whereas the ASAI publishes the name of corporate complainants. The ASAI does not generally entertain complaints between competitors but may do so if a consumer interest is at stake.

What was the Board’s interest: commercial or consumer? The Board’s own website says that individuals may engage an agent to conduct a claim on their behalf. (Why anyone other than a solicitor would take on that role, given the regulatory and liability consequences, is unknown.) If the Board’s complaint was not a case of staking its commercial territory, and instead was acting in the interest of consumers, why does it otherwise go to such great lengths to discourage consumers from engaging independent professionals, the identity and reputations of which are well known?

Battle of the bakers

It’s rare enough for an intellectual property dispute to make it to court in Ireland, so the new proceedings taken by McCambridge against Brennans over allegedly similar packaging are of interest.

US National Archives — Nothing says tradition like copyright infringement litigation

The case is at an early stage and has so far followed the usual procedure of admission to the Commercial Court, which has general jurisdiction to hear and fast-track IP cases. I’m glad to see I’m not the only one who wondered whether the similarities were actionable.

Aftershock: legal profession

I’ve been blogging about the legal profession’s own private economic crisis since January 2010 but haven’t had time lately to write any updates. Luckily, Flor McCarthy has an excellent blog post on the recent developments. He accurately sums up the frustration felt by many solicitors on the issue:

So for as long as the music kept playing [the SMDF, “run by solicitors for solicitors“] was a great system for all participants. Those paying the premiums felt that they would be looked after by their own in the event of a claim and the lucrative negligence defence work that flowed from this activity was passed out to well connected firms.

But then the music stopped and it turns out the SMDF is the fat kid without a chair. It’s broke. And now it’s looking for the rest of the professional to bail it out.

Effectively, to draw an analogy with the problems affecting the Irish economy over the past few years, the crisis with the SMDF has moved from bank guarantee territory to recapitalisation territory. Solicitors are now faced with a levy of €200 per solicitor per year for at least 10 years in order to avoid a doomsday scenario whereby a large number of negligence claims would not be covered by insurance. This could result in a significant number of bankruptcies on the part of solicitors and unpaid damages on the part of clients.

The justification for the levy is that the reputation of the profession would be damaged if this were allowed to happen. There is also the internal justification of “standing by” fellow colleagues who might otherwise go to the wall. For many solicitors, it has come as quite a surprise to learn that the SMDF wasn’t really providing insurance at all, just a form of quasi-insurance by which cover might be available. Hard to swallow for solicitors who have paid tens of thousands annually for that cover.

The latest news is that an EGM was held last night. It was initially called for the purpose of voting on the levy proposal but a spot of solicitor activism meant that a postal vote of the entire profession must now be held. The proposal will probably be carried, despite grumbles.

Once the SMDF is out of the way, the profession faces a proposal from the Law Society to impose a weird “global policy” where all solicitors will be offered cover at set rates and will not be able to arrange their own cover (or get competing quotes). This system is, in general terms, good for firms who have difficulty getting insurance and bad for firms that don’t. Apparently there will be consultation but the timeframe is narrow. The Law Society’s track record on providing information on these issues has not been great (even where the Government is concerned).

Between the changes expected from the Government as part of the IMF/ECB deal and whatever insurance changes are made by the Law Society, the profession will remain in flux for the forseeable future.