Champerty offends the rules of public policy

The High Court has ruled that champerty offends the rules of public policy. The Court held that professional third party funding, by an entity that has no independent or bona fide interest, for a share of the profits, is prohibited.

This is the first case in Ireland directly concerning the acceptability of professional third party litigation funding.

Persona Digital Telephony Ltd. and Sigma Wireless Networks Ltd. sought a declaration that entering into an agreement with Harbour Fund III Limited Partnership is not an abuse of process, and, or does not breach the rules on maintenance and champerty.

The case relates to the awarding of the second GSM mobile telephone licence to ESAT Telephone Ltd. by the Minister for Public Enterprise. Persona Digital Telphony Ltd. and Sigma Wireless Networks Ltd., unsuccessful in the competition process, are impecunious as a result.

The third party entity, Harbour III and Harbour Litigation Fund were incorporated in 2015 as a limited partnership in the Cayman Islands with a fund of £230 Sterling to invest in commercial litigation worldwide.

The Court found that maintenance and champerty continue to be torts and offences in Ireland. The Court also found that it could not develop the ingredients of a statutory offence in a manner that fundamentally changes the nature of the offence.

Persona Digital Telphony Ltd. and Sigma Wireless Networks Ltd. were seeking damages, including exemplary damages, for misfeasance in public office, breach of duty, including legitimate expectations, constitutional rights, rights under European Union Law and a declaration that the European Communities (Mobiles and Personal Communications) Regulation, 1996, breach European Union law. 

NI: Facebook liable for privacy breach for failing to disable access to content

The High Court in Northern Ireland has awarded £20,000 in damages to a convicted sex offender for the misuse of private information.

Facebook Ireland Limited hosted a page operated by Joseph McCloskey entitled, 'Keeping our Kids Safe from Predators 2". The social media giant also hosted a page by RS, the father of one of CG's victims.

CG brought the case seeking damages and an injunction on the basis that Facebook and Mr. McCloskey misused private information, breaching Article 2, Article 3 and Article 8 of the European Convention on Human Rights, and are guilty of actionable negligence.

The case relates to a series of postings on Facebook. The first series of posting was on the profile page of Mr. McCloskey in April 2013, attracting more than 180 comments, all hostile to CG. The contents were removed by early June. The second series of postings was on the profile page of RS, appearing in November 2013 and removed in early December. The second series of postings included a photograph of CG, shared more than 1,600 times and the name of the area CG was thought to reside in. The third series of postings also appeared on the profile page of RS in late December 2013, removed in January 2014.

The High Court heard the system operated by Facebook to remove content requires the complainant to provide the Uniform Resource Locator (URL) for each posting which a complaint is made about. Mr. Justice Stephens observed that this requires the complainant to accurately record the URL for each posting, and requires the reasons to be provided as to why each posting should be removed. Mr. Justice Stephens described this system as "laborious":

The question also arises as to whether the requirement to have the URLs of each comment about which complaint is being made merely creates the potential for entering into endless and in some circumstances fruitless correspondence because with each new posting there is a new URL so there is endless potential to identify each URL given the speed with which comments can be added.

In evidence, CG explained that he was extremely concerned by the postings on Facebook, living in fear because he anticipated violence. This affected his relationship with his disabled child, who was concerned about being seen in the company of CG.

Mr. Justice Stephens held that CG had an expectation of privacy concerning his criminal convictions, the sentencing, and his personal information or information about his family. However, the expectation of privacy had to be balanced against the right to freedom of expression for Facebook and Mr. McCloskey.

In concluding, Mr. Justice Stephens held that the actions of Mr. McCloskey:

[...] incited violence and hatred. It was indiscriminate and led to the potential for public order situations to develop. It was an attempt to hunt a sex offender, to drive him from his home and to expose him to vilification. All of the content of the profile/page [...] in relation to CG was oppressive and unreasonable and there was a course of conduct over a period of time which amounted to harassment of CG and which both [Facebook] and [Mr. McCloskey] knew or ought to have known amounted to harassment of him.

Mr. Justice Stephens found Mr. McCloskey liable for the misuse of private information and for harassment. However, no finding were made in respect of any breach of the Data Protection Act 1998 because no case was pleaded. However, Mr. Justice Stephens found that the failure of Facebook to delete the postings amounted to misuse of private information.

Mr. Justice Stephens granted CG the injunction preventing Mr. McCloskey from harassing him by any means. While Facebook was ordered to remove the "Keeping our Kids Safe From Predators 2" page. Finally, Mr. Justice Stephens awarded £15,000 in damages against Facebook and Mr. McCloskey for the postings by Mr. McCloskey, and £5,000 against Facebook for the postings by RS. 

Obligation on banks to assess creditworthiness of borrowers

In 2012 the High Court awarded KBC Bank €17,694,130 in damages against Dublin based law firm BCM Hanby Wallace (now Byrne Wallace) over failures to ensure the bank had security for the loans.

The Supreme Court has directed the High Court to reconsider findings that there was no contributory negligence by KBC Bank in how the bank suffered muti-million euro losses to struck-off solicitor Thomas Byrne and property developer John Kelly.

KBC Bank incurred the losses due to the failure in having security for €25m loans advanced to Mr. Byrne and Mr. Kelly.

The Supreme Court ruling addressed seminal issues relating to the duties of banks to the shareholders when advancing loans, including the responsibility to investigate the financial standing of borrowers.

Mr. Justice Brian McGovern in the High Court found the matter was about ‘multiple failures’ repeated across several separate loan transactions. He rejected arguments of contributory negligence by KBC Bank on the grounds that the bank was entitled to rely on assurances from professionals retained by KBC Bank. The Supreme Court ruled Mr. Justice McGovern had erred in how the issue of contributory negligence by KBC Bank was addressed.

Mr. Justice Nial Fennelly said that while BCM Hanby Wallace negligence related to obtaining security for the loans was a direct and proximate cause of the loss, there was an issue as to whether it was the only effective cause of the loss. It was important in this context to distinguish between the two types of contributory negligence alleged against KBC Bank. The first type of contributory negligence is the want of care in making decisions to lend. The second type of contributory negligence is the failing to verify or supervise the solicitors’ performance of their duties.

On the assumption KBC Bank failed to exercise due care in lending, Mr. Justice Fennelly was satisfied KBC Bank was exclusively responsible for those decisions.

Mr. Justice Fennelly found it was not the task of BCM Hanby Wallace to check the financial soundness or reliability of Mr. Byrne and Mr. Kelly. He also found that the High Court erred in finding there was no contributory on grounds of finding the actions of the borrowers were merely an inevitable or necessary cause, and not a proximate cause, of the loss.

Mr. Justice Fennelly noted the effective cause of the loss was the decision to lend to Mr. Byrne and Mr. Kelly, combined with the negligence of BCM Hanby Wallace.

Mr. Justice McGovern remarked that aspects of the loans to Mr. Byrne were "highly questionable". He noted the "somewhat careless" approach of KBC Bank in its actions.

On the second type of contributory negligence, the failure to verify or supervise the solicitors’ performance of their duties, KBC Bank was entitled to rely on the expertise of BCM Hanby Wallace to put in place security. Although it may be argued that the responsibility of KBC Bank in this context was so small it should not be fixed with any responsibility, there is no absolute rule.

Mr. Justice McGovern argued that if evidence showed the errors of BCM Hanby Wallace were so obviously the errors could not have been overlooked, there was a fault on the part of KBC Bank and it was open to BCM Bank Wallace to argue the obligations KBC Bank had in accordance with European Union Regulations on Licensing and Supervision of Credit Institutions. Also see 2009 and 2013.

The European Union Regulations requires the banks to manage business in accordance with ‘sound administrative and accounting principles’. The banks are also required to put in place and maintain internal control and reporting arrangement to ensure  business in managed.

Mr. Justice Fennelly directed that Byrne Wallace appeal  be allowed on the issue of contributory negligence and the matter should be reconsidered by the High Court.   

Prison authorities have duty of care to inmates

A recent High Court ruling could have implications for prisoners attacked in custody, after a former prisoner sued for negligence and a breach of duty. Almost four times the amount awarded in 2009.

Peter Creighton was serving a sentence in Wheatfield Prison when he was attacked with a knife in January 2003. Mr. Creighton needed 120 stitches for two-and-a-half feet of lacerations to his body.

Mr. Creighton claimed the prison and the state failed to take reasonable precautions for his safety. He said he did not know his attacker, and the system for bringing prisoners from the cells to receive methadone was dangerous.

Counsel for the state argued that it was not possible in a prison to guarantee the safety of a prisoner and ensure his protection.

Mr. Justice Iarfhlaith O’Neill said there could be few tasks more difficult than the management of the prison system. Mr. Justice O’Neill added that the courts would not impose on prison authorities a duty of care that was not capable of being preformed, but said it was necessary for the courts to intervene were there were systems or practices that have obvious deficiencies and foreseeable risks.

The case of Mr. Creighton previously came before the High Court in October 2009. The state appealed the High Court ruling. The Supreme Court ruled the case should be re-heard.