On behalf of all the team it is again my great pleasure to welcome you to this the latest edition of LK Shields Update It is my pleasure also to announce that Richard Curran joined the firm as a partner, in the Business Department, with effect from December 12th. Richard qualified as a lawyer in 1996 and, in addition to spending a number of years in another prestigious Irish law firm, spent over five years working for Hammonds in their London and Berlin offices on corporate and public infrastructure matters. Richard is qualified in Ireland, England and Wales.

We continue to aggressively recruit to ensure that we keep pace with our clients' growth and changing requirements, and have been joined by an additional nine lawyers in 2005. We will have a number of additional lawyers to introduce to you in our next edition of Update.

As usual please let us know if there are any particular topics that you would like us to cover in future issues and, as always, we shall do our very best to accommodate. Our door is always open.

Hugh Garvey, Managing Partner.

The number of age discrimination cases being heard by the Equality Tribunal is on the rise. According to the Equality Tribunal's last report (published in June), the number of claims of age discrimination brought before it under the provisions of employment equality legislation increased by 53% on the previous year.

The provisions of the Employment Equality Act 1998 (the 1998 Act) went some way towards addressing age discrimination in the workplace. The Equality Act, 2004 revised some of those provisions. The 1998 Act had been criticised because it applied only to employees working under a contract of employment, so partners and self-employed persons had no protection under the Act. The Equality Act 2004 has extended the scope of the legislation to self-employed persons and partners in partnerships, which includes farmers, barristers, sole traders, and partners in law firms and accountancy practices.

Whilst the Employment Equality Act 1998 provided that individuals between the ages of 18 and 65 years must not be discriminated against. The Equality Act 2004 amends the age limits to protect all those over 16 years of age. However, an employer may still set a minimum age (not exceeding 18 years) for recruitment to a particular job. It should also be noted that people over 65 years of age are now protected from age discrimination under the 2004 Act, although an employer may still offer a fixed-term contract to a person over the compulsory retirement age and this will not be regarded as discrimination.

The first age discrimination complaint to be upheld in Irish law was The Equality Authority v Ryanair. The Employment Equality Act 1998 provides that you cannot publish or display an advertisement which relates to employment and which a) indicates an intention to discriminate or b) might reasonably be understood as indicating such an intention'. The Ryanair advertisement in question stated: 'We need a young and dynamic professional ...' and 'the ideal candidate will be young, dynamic …'. The Equality Officer found that the use of the word 'young' in this employment advertisement constituted discrimination on the grounds of age and ordered that Ryanair pay €10,157.90 by way of compensation for the effects of discrimination. Ryanair was also ordered to undertake a comprehensive review of its equal opportunities policies to ensure that they were fully compliant with equality legislation.

The Equality Tribunal, the Labour Court and the Circuit Court all have roles in relation to claims of discrimination. All claims (except gender discrimination claims) must first be referred to the Equality Tribunal. This is the quasi-judicial body established to investigate and decide on such claims. A complaint of discrimination (or harassment) must be made within six months of the last act of discrimination. However, the six-month time limit can be extended up to 12 months by the Director of the Equality Tribunal 'for reasonable cause'.

As you may be aware, employers can be held vicariously liable if their staff behave in a discriminatory manner, whether through direct discrimination, harassment or bullying. This means that the behaviour of all employees is under scrutiny. In order to protect themselves, employers should inform all staff of what is acceptable and unacceptable behaviour and monitor matters appropriately. Those involved in any level of management should make strenuous efforts to ensure that the workplace is free of discrimination and should be given appropriate training so as to ensure they take their responsibilities seriously.

Finally, employers should have in place a clear written policy dealing with discrimination, including harassment, sexual harassment and bullying.

For further information please contact Jennifer Clarke.

The long-awaited Safety, Health and Welfare at Work Act 2004 (the 2004 Act) became law on 1 September 2005, replacing the Safety, Health and Welfare at Work Act 1989.

The new 2004 Act imposes general duties on all people in places of work, whether employers, employees or the self-employed to ensure 'so far as is reasonably practicable' the safety, health and welfare of persons at work. It increases the onus on employers by saying that an employer's duties now include a duty to 'manage' work-related activities so that they do not endanger anyone at work (including contractors, and members of the public). Employers must also ensure adequate instruction and training, without loss of earnings to employees, provide protective equipment at no cost to the employee and provide information to employees in a language that 'is reasonably likely to be understood by the employee' - a provision that is clearly aimed at the needs of non-nationals. The 2004 Act increases the fines and penalties that can be imposed, and makes it much easier to prosecute an organisation's directors and senior officers.

As had been the case under the 1989 Act, the principal duties imposed by the legislation are not absolute duties; rather, they are qualified by the phrase 'so far as is reasonably practicable'. Essentially, the employer must take all technically possible measures against all foreseeable risks in drawing up the organisation's health and safety standards. An employer can still argue that a particular measure might not be 'reasonable', but the onus of proof in establishing that all 'reasonably practicable' steps have been taken continues to rest with the employer.

The Safety Statement

It continues to be a requirement for organisations to have a written safety statement setting out how safety, health and welfare is being managed and introducing preventative strategies to protect those at work. The 2004 Act enhances the importance of the safety statement by requiring the statement to be reviewed annually, and also to specify how safety in the organisation is to be managed. (An employer with three employees or less can meet the safety statement requirement by adhering to a special code of practice developed by the Health and Safety Authority.) Organisations are obliged to engage a 'competent person' to help draw up and develop the health and safety policy, or to ensure that competent health and safety expertise is outsourced.

The Health and Safety Authority (HSA) has overall responsibility for the administration and enforcement of health and safety at work in Ireland. Its remit includes monitoring compliance with legislation and it may take enforcement action, including prosecutions. The HSA now has the power to compile and publish a list of the names and addresses of businesses where a fine has been imposed by the court, or where a prohibition notice has been served by the HSA or where the court has made an interim or interlocutory order.

HSA inspectors can also impose on-the-spot fines not exceeding €1,000 if they have reasonable grounds for believing that a person is committing a (minor) offence. The person served with the notice has 21 days in which to make the payment. If they fail to do so, the HSA may prosecute them.

Offences

The 2004 Act categorises offences into two types. The penalty for less serious offences is a fine of up to €3,000, following a summary prosecutions brought by the HSA in the District Court. Examples of 'less serious offences' include failure to have a safety statement, failure to consult employees, and obstructing an inspector.

A person found guilty of a more serious offence is liable, on summary conviction, to a fine not exceeding €3,000 or imprisonment up to six months or both.

Very serious breaches of the 2004 Act are dealt with by way of prosecution on indictment and such cases are heard in the Circuit Court. The maximum penalty for conviction on indictment is a fine up to €3 million or imprisonment for up to two years, or both.

Under the 2004 Act, employers and senior managers are potentially personally liable for health and safety breaches, and could face either two years' imprisonment or a maximum fine of up to €3,000,000 on conviction on indictment. It is worth noting that, in addition to prosecution under the 2004 Act, fatal workplace-related accidents can given rise to prosecutions for manslaughter in the event it is established that an accused person consciously and knowingly acted in a grossly reckless way which endangered life and caused death.

Section 13 of the Act repeats the existing general duty of employees to comply with relevant safety and health laws but also introduces some new provisions. In general, employees must:

• not be under the influence of intoxicants at work to the extent that they are likely to endanger their own safety or that of any other person
  
  
• not engage in improper conduct or behaviour,
  
  
• wear personal protective clothing where necessary,
  
  
• cooperate with their employer and look out for one another and
  
  
• not do anything that would place themselves or others at risk.

One of the most controversial provisions of the 2004 Act concerns the testing of employees for intoxicants. It says that employees must submit to tests under the supervision of a doctor, if reasonably required by an employer. Regulations have yet to be introduced to govern this process, although the Minister has stated that 'it is important to allay fears that testing will be a requirement across all employments. There is no such intention'.

Following consultation with the social partners and other interested groups, the Minister has indicated that the intended regulations will bring in the testing requirement 'in safety critical situations and then only on a sectoral basis'. While these regulations are awaited with interest, prudent employers should have a drug and/or alcohol awareness/misuse policy in place, particularly in relation to employees involved in safety critical areas such as transport and the operation of machinery.

Much of the publicity surrounding the new Act has concentrated on the fines and penalties introduced and the 'name and shame' powers given to the Health and Safety Authority. These provisions have been described as a 'wake-up call' to employers that are not currently complying with their obligations. In the wake of the implementation of the Act, every organisation should comprehensively review its safety management systems and prioritise health and safety in the workplace.

For further information please contact Jennifer Clarke.

Generally speaking, acquisitions must be notified to the Competition Authority if certain turnover thresholds are met. The thresholds do not apply in the case of media mergers, and all media mergers must be notified to the Competition Authority and the Minister for Enterprise, Trade and Employment. A media merger is defined as a 'merger or acquisition in which one or more of the undertakings involved carries on a media business in the State'.

The Competition Authority has confirmed that a media merger occurs within the meaning of the above definition if either the purchaser's group or the target group carries on a media business. As a result, if the purchaser group has an existing media business in the State, any acquisition by the purchaser's group will result in a media merger irrespective of the business being carried out by the target.

Definition of Media Business

A media business is defined as the:

1. business of the publication of newspapers or periodicals consisting substantially of news and comment of current affairs,
   
   
2. business of providing a broadcasting service or
   
   
3. business of providing a broadcasting services platform.

This definition is wider than its predecessor under the Mergers Act 1978 as it covers TV and radio.

For further information please contact Marco Hickey.

Over the last number of years, the spotlight has increasingly been turned on company directors accused of acting irresponsibly. In addition, the Director of Corporate Enforcement has recently made a number of applications to have such directors disqualified from having any involvement in company affairs.

The law relating to directors who have acted irresponsibly is to be found in sections 150 and 160 of the Companies Act 1990, but the test by which a court decides whether a director has acted irresponsibly has been significantly broadened by a number of judgments, in particular, the La Moselle Clothing case.

So how does a court determine whether an order ought to be made against a company director?

Restriction of Directors

In cases brought before the courts, section 150 of the 1990 Act imposes a mandatory obligation on the court to restrict directors of insolvent companies (from acting as directors of other companies) for a period of five years unless those other companies meet certain financial criteria. The section applies to anyone who was a director of the insolvent company in question, either at the date of (or within 12 months of the commencement of) its winding up. In order to avoid a restriction order, a director must prove that:

• he has acted honestly and responsibly in relation to the company's affairs
  
  
• there is no other reason why it would be fair that he should be subject to the restrictions imposed by the Act.

In a recent case, In the matter of SPH Limited (In Voluntary Liquidation), Ms Justice Finlay Geogheghan set out the law dealing with how a court should determine the responsibility of a director for the purposes of section 150. Firstly, she adopted the test set out in the 1998 case of La Moselle Clothing Limited v Soualhi, that the court should take into account the following factors:

• the extent to which the director has or has not complied with any obligation imposed on him by the Companies Acts 1963-1990
  
  
• the extent to which his conduct could be regarded as so incompetent as to amount to irresponsibility
  
  
• the extent of the director's responsibility for the company's insolvency o the extent of the director's responsibility for the net deficiency in the assets of the company disclosed at the date of the winding up o the extent to which the director, in his conduct of the affairs of the company, has displayed 'a lack of commercial probity or want of proper standards'.

Secondly, Ms Justice Finlay Geoghegan looked at the Supreme Court judgment in Re Squash (Ireland) Limited (In Liquidation) in 2001. The judge in that case adopted the five criteria set out in La Moselle but also emphasised that the court must apply an objective standard when considering the question as to whether the directors had acted responsibly.

Thirdly, Ms Justice Finlay Geoghegan noted that the test had been broadened by her own recent judgment in a case in 2004, Kavanagh-and-Delaney and others. In this case, she held that the duties owed by a director are not only those imposed by the Companies Acts but also the common law fiduciary duties and duties of skill and care. She also addressed the obligations imposed on non-executive directors and reinforced the onus on non-executive directors to insist that board meetings are held and that financial information is made available on an ongoing basis, even where there may be no reason to believe that there are financial difficulties.

Review of Recent Decisions

In the matter of Mitek Holdings Limited, Mitek Pharmaceuticals Limited, Castle Holding Investment Company Limited, Mitek Limited and Miza Ireland Limited (all in Liquidation), 21 February 2005.
In this case, the Court made an order restricting the directors on the basis that they had allowed certain transfers to be made while the companies were insolvent and had created a debenture as security. She held that these actions were sufficient evidence that they had not acted responsibly.

In the matter of USIT World Plc (in Liquidation) and in the matter of USIT Limited (In Liquidation), 10 August 2005.
This matter concerned an application to restrict nine directors of USIT World Plc and USIT Limited (both in liquidation). Mr Justice Peart concluded that all of the directors had acted honestly and responsibly in carrying out their duties. He held that the collapse of the companies was directly related to the events of 11 September 2001 and not any irresponsibility or dishonesty on the part of the directors.

Automatic disqualification

Section 160(1) of the 1990 Act provides for an automatic five-year disqualification for a person from acting as an auditor, director, officer, receiver, liquidator or examiner if that person is convicted on indictment of any offence in relation to a company or involving fraud or dishonesty. To date, very few people have been disqualified by the courts from acting as a director pursuant to this section.

In the matter of CB Readymix Limited (In Liquidation), 20 July 2001.
In this case, the High Court, and on appeal the Supreme Court, made an order disqualifying a liquidator who had failed to act in an impartial manner, had destroyed the books and records of the company and had failed to act in the interests of the creditors, in particular, the Revenue Commissioners. The High Court disqualified the respondent from acting as a liquidator, receiver or examiner for seven years. It further held that he could only act as a director, auditor or secretary of a company in circumstances where certain criteria were met. The Supreme Court upheld the appeal, saying that the purpose of section 160 was not to punish the individual but to protect the public.

Director of Corporate Enforcement

Under the 1990 Act, the Director of Corporate Enforcement can investigate all insolvent companies, whether in liquidation or not. He can also bring an application to disqualify directors of a company that has been struck off the register for failing to file an annual return.

Three recent applications were brought by the Director under the act: In the matter of Clawhammer Limited, In the matter of Shinrone Limited and In the matter of Cautious Trading Limited. These three companies had each been struck off the Register of Companies as a result of the failure to file annual returns.

In these cases, the Director claimed that the applications were being brought by him pursuant to section 160 to stop the practice of directors allowing their insolvent companies to be struck off the Register of Companies as a result of non-filing of annual returns. He argued that this was being done to avoid the discharge of creditors according to statutory priority.

The Court held that for the Director to succeed in having a director disqualified under section 160(2)(h), he must simply prove that:

• a letter was sent to the company, after 1 March 2002, stating that the company was struck off the register for the non-filing of annual returns and
  
  
• the respondents were directors of the company at the time.

The Court also held that once the Director has established these two conditions, the court is obliged either to disqualify the directors or, in certain limited circumstances, to restrict the directors. In order for directors to avoid being disqualified, they must show to the court that the company had no liabilities at the time it was involuntarily struck off the Register of the Companies or that such liabilities that existed had been discharged prior to the date of the disqualification action.

In light of the mandatory nature of the section 150 order, it goes without saying that directors (including non-executive directors) should behave in an honest and responsible manner. In determining whether a director has acted in a responsible manner, the courts will look at such things as the maintenance of proper books and records, trading in circumstances where the company is insolvent, the preferring of certain creditors over others, and ensuring that one is kept up to date with the company's affairs.

With regard to disqualification orders, the recent applications brought by the Director of Corporate Enforcement mean that directors should be very conscious of the strict test laid down by the court in relation to section 160(2)(h) of the 1990 Act.

For further information please contact Jill Callanan.

The Government has passed new legislation to attempt to stop private companies buying out the freehold interest in property owned by the State. There was concern that under the Landlord and Tenant Acts, tenants were allowed to do just that, in certain circumstances.

Prior to its amendment, the legislation appeared to allow commercial tenants of State-owned property to create legal devices to buy a freehold interest, despite the fact that the leases under which they held their interest may have been structured to prevent them from doing so. For example, the media recently reported that an IDA tenant at Clonshaugh Industrial Estate had created a sub-lease to a third (related) company which was structured in such a way so as to allow the third company to fall within the categories of tenants permitted by the legislation to purchase a freehold interest in their property. The State was forced to negotiate a settlement and to allow the freehold interest to be conveyed to the third company. The Government has now amended the relevant Landlord and Tenant Acts with a view to preventing this situation arising in the future.

For further information please contact Gerard O'Hanlon.

The Residential Tenancies Act 2004 (the Act) contains far-reaching reforms of rental accommodation in the the private sector. Amongst other things, it:

• improves security of tenure for tenants o imposes obligations on both landlords and tenants
  
  
• establishes a statutory Private Residential Tenancies Board (PRTB) to resolve disputes and a system of tenancy registration
  
  
• introduces rent setting and rent reviews, and
  
  
• introduces procedures for the termination of tenancies.

The Act applies to the mainstream private rented sector and does not apply to:

• owner-occupied accommodation
  
  
• social housing
  
  
• the formerly rent-controlled sector
  
  
• long occupation equity tenancies
  
  
• business lettings
  
  
• holiday lettings
  
  
• 'rent a room' or other arrangements whereby the landlord also resides in the dwelling
  
  
• employment-related lettings
  
  
• section 50 student accommodation
  
  
• a rented dwelling where the landlord's spouse, child or parent is a resident and no lease or written tenancy agreement has been signed.

Obligations on Landlord and Tenant

The Act imposes minimum obligations, which apply to new landlords and tenants of all tenancies regardless of whether there is a written tenancy agreement, and these obligations are in addition to obligations arising out of any other statute. As a result, tenants must:

• pay the rent and other charges specified in the lease or tenancy agreement when due
  
  
• avoid causing deterioration beyond normal wear and tear and, if necessary, take reasonable steps to restore the dwelling
  
  
• notify the landlord of any defects that come within the landlord's repair requirements
  
  
• allow access for repairs to be carried out and, by appointment, for routine inspections
  
  
• keep the landlord informed of the identity of the residents
  
  
• not engage in or allow anti-social behaviour
  
  
• not act or allow visitors to act in a way that would invalidate the landlord's insurance
  
  
• not cause the landlord to be in breach of any statutory obligations
  
  
• not alter, improve or assign or sublet or change the use of the dwelling without written consent from the landlord.

Similarly, the landlord must:

• allow the tenant to enjoy peaceful and exclusive occupation
  
  
• maintain the structure and fittings to ensure they are in the same condition as they were at the beginning of the tenancy
  
  
• insure the structure of the dwelling for at least €250,000, subject to the insurance being available at a reasonable cost
  
  
• provide a point of contact with the landlord's agent
  
  
• promptly refund deposits unless rent is owing or there is damage beyond normal wear and tear
  
  
• reimburse tenants for reasonable vouched expenditure and repairs that were appropriate to the landlord
  
  
• enforce tenant obligations
  
  
• not penalise tenants for making complaints or taking action to enforce their rights.

The rent may not be greater than the open market rate. The rent cannot be reviewed more than once in any 12-month period unless there has been substantial change in the nature of accommodation that warrants a review. The rent cannot be reviewed in the first 12 months of the tenancy. Either landlord or tenant can initiate a review. Tenants are to be given 28 days' notice of new rents. There is an obligation to notify the PRTB within one month of any rent change.

The landlord must register details of all their tenancies with the PRTB within a month. The requirement to register applies anywhere a new tenancy is created. Revised rent must be updated in the register within a month of taking effect. In a case where a tenancy lasts for four years, a new registration application and fee will apply. The Act gives tenants certain rights in relation to management companies of apartment complexes. Management companies will be identified in tenancy registration details. Landlords must convey tenants' complaints to the management company, which must have regard to the complaint and furnish the landlord with a written statement, that must be forwarded to the tenant, of steps to be taken to deal with the complaint.

Tenants may request the management company to supply written particulars of service charges and how they were calculated, and the company must comply to the extent that it would be obliged to comply with such a request from an apartment owner.

If there is no fixed-term agreement such as a lease or contract, the landlord can terminate a tenancy during the first six months, giving a minimum of 28 days' notice to quit in writing. If the tenancy has lasted six months, it can only be terminated if the one of the grounds specified in section 34 of the Act applies.

These are:

• failure by the tenant to comply with his obligations
• the dwelling no longer meets the tenant's accommodation needs
• the landlord intends to sell the property at full market value within three months of the termination
• the landlord and/or his family are going to occupy the dwelling
• the landlord intends to refurbish the building and this requires it to be vacant o the landlord intends to change the dwelling's use.

After the six-month period of continuous occupation has ended, the tenant has the right to an additional three and half years' tenancy. This is known as a 'part IV tenancy'.

At the end of the four years, a new tenancy will begin if no notice of termination is served. A four-year cycle begins again on the same basis and the landlord may terminate the tenancy within the first six months on any grounds as long as he gives the required notice.

Final notices of termination must:

• be in writing
• be signed by the landlord or his authorised agent
• specify the date it was served
• specify the reason (if the notice is terminating a part IV tenancy)
• specify the termination date
• state that any dispute in relation to the validity of the notice or the rights of landlord or tenant be referred to the PRTB within 28 days.

Tenants do not need to give a reason for terminating a tenancy. The notice period required depends on the length of the tenancy .

DURATION OF TENANCY	NOTICE BY LANDLORD	NOTICE BY TENANT
Less than 6 months	28 days	28 days
6 or more months, but less than 1 year	35 days	35 days
1 year or more, but less than 2 years	42 days	42 days
2 years or more, but less than 3 years	56 days	56 days
3 years or more, but less than 4 years	84 days	56 days
4 or more years	112 days	56 days

The landlord may terminate a part IV tenancy with seven days' notice on the basis of a tenant's antisocial behaviour. The landlord may terminate with 28 days' notice for non-compliance with tenancy obligations. If the non-compliance is non-payment of rent, the landlord must notify the tenant in writing that the rent is outstanding and give them 14 days to pay the rent prior to serving 28 days' notice to quit. Longer notice may be given, but not more than 70 days where the tenancy has lasted less than six months. The parties can agree to shorter notice periods but only at the time of termination. Where a landlord refuses consent to assign or sublet a fixed-term tenancy, the tenant may terminate the tenancy before the expiry of the fixed term.

Extreme care must be taken in serving a termination notice. Damages may be awarded against any landlord who abuses the termination procedure. Service of an invalid notice of termination which leads either the landlord or the tenant to act upon such notice, which adversely affects the person on whom the notice has been served, is a criminal offence.

Dispute Resolution

Disputes arising between landlords and tenants are generally to be referred to the PRTB instead of the courts. Either party may initiate the process. The person who initiated the process will have to pay a fee. It is an informal process.

Once a reference has been made to the PRTB, it may communicate with the parties concerned to ensure that they are fully aware of the issues that are the subject of the reference. The PRTB then offers mediation to the parties, unless it is a dispute that the board considers should go directly to a Tenancy Tribunal. If one of the parties does not consent to mediation or does not respond, the matter will then be subject of adjudication.

Where determination orders by the PRTB are not complied with, they may be enforced by the Circuit Court. The board may award damages of up to €20,000 and arrears of rent up to €20,000 or twice the annual rent, whichever is greater (but a maximum of €60,000 applies to rent arrears or awards). If the case involved amounts greater than these, it will have to be taken through the courts.

By imposing obligations on both the landlord and tenant, the Act regulates the landlord and tenant relationship. It places an onerous administrative burden on landlords between registering the tenancy and ensuring a notice of termination is in the correct form to be effective. Part 4 of the Act also restricts the way a landlord can deal with his property to the extent that he can only terminate such a tenancy on the grounds specified in section 34 of the Act.

The Act gives tenants greater security of tenure and provides an alternative dispute mechanism, which it is hoped will provide a quicker more affordable means of resolving disputes between landlords and tenants.

Notice period required NOTICE BY NOTICE BY DURATION OF TENANCY LANDLORD TENANT Less than six months 28 days 28 days Six months or more, but less than one year 35 days 35 days One year or more, but less than two years 42 days 42 days Two years or more, but less than four years 56 days 56 days Three years or more, but less than four years 84 days 56 days Four years or more 112 days 56 days Shorter notice periods may also be given in certain situations under the Act.

For further information please contact Gerard O'Hanlon.

Owners of contaminated land are severely restricted in transferring that land, according to the Waste Management Acts 1996-2003 and a recent decision by the European Court of Justice (ECJ).

Polluted or contaminated land may only be transferred to an 'appropriate person', that is, a local authority or a person who holds a licence to manage waste. Any transfer of contaminated land which is not to an appropriate person is invalid. In addition, the vendor has committed an offence, and both the parties to this transfer are deemed to be responsible for the waste.

The Van De Walle case at the ECJ involved a petrol station where defects in the underground structure allowed hydrocarbons to leak into the surrounding soil. Both the hydrocarbons in the ground and the surrounding soil itself were deemed to be 'waste' for the purposes of the European legislation, which is echoed in the Irish Waste Management Act, 1996. It could be argued that any contaminated land consists of waste, and the owner of that land is therefore a 'holder' of waste, with the responsibilities and obligations implied relating to management, transfer and disposal of that waste.

This is the argument held by the Environmental Protection Agency (EPA) in the case of the Silvermines, County Tipperary. Here, a mining company transferred property to a local farmer. The EPA carried out an investigation into the land and found it to be contaminated. The mining company, Mogul of Ireland, was held to remain the owner of the land and to be responsible for the decontamination works.

When buying lands that may be contaminated, it is important that a thorough investigation is made into the environmental status of the property. This could include the use of qualified environmental consultants to carry out a survey of the lands. If an individual or body finds itself in possession of land that may be contaminated, their first step should be to consider whether any damage is being done by the contamination, and to engage suitably qualified environmental consultants to carry out an impact assessment. If this reveals significant contamination, the local authority and/or EPA should be consulted on how best to approach the situation.

The purchaser of contaminated lands must be a local authority or must hold a licence for the management of the waste involved. A purchaser may apply for the licence after buying the lands, although this would result in a period of non-compliance. However, it seems likely that a pragmatic view would be taken and that the subsequent rectification of the situation would be accepted. The application for a licence should be made to the EPA's licensing section. The procedure usually involves a number of submissions by the applicant, further to which the EPA may request additional information. The process takes around six to nine months.

The question arises as to how the problems raised may be solved if the transfer to an appropriate person or the procurement of the relevant licence is not possible. Remediation works on the site might allow the decontamination of the land in some cases, and therefore the removal of the problem. If there is no 'waste', then the restrictions relating to the transfer of the land, and the obligations of the 'holder of waste' are avoided. The EPA and qualified environmental consultants should be consulted together in order to reach agreement on the decontamination measures to be taken. With appropriate measures, the problem may be removed and dealings with the previously contaminated lands may proceed without further restriction.

There are indications from the EPA that this is not a 'black and white' area, and that each case will be handled on its own merits, but the importance of proper due diligence and compliance with licensing and other requirements cannot be emphasised enough.

For more information please contact Gerard O'Hanlon.

The acquisition of shares in a listed company is subject to an extensive number of regulatory requirements in the form of the Irish Takeover Panel Act, 1997 Takeover Rules, 2001-2004 ('the Rules'), the Substantial Acquisition Rules, 2001 and the Irish Takeover Panel Act, 1997 Substantial Acquisition (Amendment) Rules, 2004 ('the SARs').

The recent decision of the Irish Takeover Panel on the purchase of shares by Sean Dunne in Jurys Doyle Hotel Group illustrates the importance of strict compliance with the Rules and the SARs. The Panel ordered that the shareholding of Mr Dunne and DTC Construction Services Limited be reduced to ensure compliance with the rules on takeovers in this country.

Restrictions on Acquisition

The Rules impose certain restrictions on an offeror in terms of the percentage of shares it can acquire in an offeree. Rule 5 provides that any persons 'acting in concert' holding collectively at least 30% or more (but not more than 50%) of the voting rights of a company cannot acquire any more than a further 0.05% of the voting rights. Such persons are required to make a mandatory offer for the company if an additional 0.05% is acquired in this manner within a 12-month period. The phrase 'acting in concert' is broadly defined and can include fund managers, advisers and family members or others involved in the affairs of the target company or the conduct of the transaction. Similar provisions exist in respect of the acquisition of control of a company by that company redeeming its own securities.

Sean Dunne/DTC Case

On 12 August 2005, Sean Dunne and DTC purchased a number of shares in the capital of Jurys, representing 3.36% of the company's total issued share. Over two days (23 and 24 August), Mr Dunne and DTC acquired further shares, increasing their cumulative stake in Jurys to a reported 21%. This prompted the Panel to publish a regulatory announcement on 1 September in respect of its ruling.

The Panel held that the purchase of a total of 2,852,287 shares by Sean Dunne and DTC and the manner in which this was effected violated Rule 4(a) of the SARs, which prohibits (subject to certain limited exceptions) any person from making a substantial acquisition of securities. Rule 4(a) restricts the rate at which a person is permitted to increase his shareholding in any listed company to an aggregate amount representing between 15-30% of the total voting rights of the a target by providing that a person cannot acquire 10% or more of the total voting rights in a company within any seven-day period, where this acquisition would result in the purchaser holding 15% or more (but less than 30%) of the total voting rights of the target. Sean Dunne and DTC were directed by the Panel to dispose of the requisite number of shares to reduce the Dunne/DTC shareholding to below 15%.

This decision demonstrates the degree of caution that should be should be exercised by a potential purchaser where the acquisition of shares in any publicly-quoted company is proposed.

For more information, please contact Marco Hickey or Zelda Deasy.

The government has introduced new regulations to tackle insider dealing and market manipulation. The EU Market Abuse (Directive 2003/6/EC) Regulations, 2005 are the result of an EU initiative to create a common legal framework for the prevention of market abuse and manipulation and to promote market integrity and investor confidence in Europe's financial markets.

The Financial Regulator has been designated as the single regulatory and supervisory authority in Ireland empowered to deal with such offences and has been given rule-making powers under the Investment Funds, Companies and Miscellaneous Provisions Act, 2005. The Regulations apply to any financial instrument admitted to trading on an EEA regulated market, or where a request or admission to trading has been made, irrespective of whether the transaction takes place on that market. They also apply to those financial instruments not admitted on such markets but whose value depends on financial instruments admitted to trading, or for which application for admission has been sought, on such markets. Insider dealing generally involves the use of unpublished price-sensitive information for benefit. Market manipulation includes involvement in fictitious transactions or the provision of false or misleading information in order to manipulate the market.

The Regulations impose a number of obligations, including:

• anyone who professionally arranges transactions must notify suspicious transactions to the Financial Regulator
  
  
• issuers of financial instruments must publicly disclose inside information without delay
  
  
• issuers of financial instruments must draw up lists of those with access to insider information
  
  
• those involved in the management of issuers of financial instruments must comply with notification rules regarding managers' transactions
  
  
• anyone, including the media, involved in the preparation and dissemination of recommendations (including research) about the fair presentation of research must disclose conflicts of interests.

Those people obliged to make disclosures or notifications to the Financial Regulator under the Regulations must do so in accordance with the Market Abuse Rules. The Regulations also deal with exemptions in the case of share buy-back programmes and price stabilisation of financial instruments. In addition, they allow the Financial Regulator to recognise certain market practices as being acceptable and take into account the transparency of the practice, the need to safeguard the operation of the market forces and the impact of the practice on market liquidity.

The Regulations came into effect on 6 July and 1 October and, together with the Act, will give effect to the EU's Market Abuse Directive and other related EU Directives.

For further information please contact David Williams.

LK Shields Solicitors has been involved in a High Court landmark decision on the thorny question of what constitutes a commercial agent. Mr Justice Clarke delivered his judgment in the case of Michael Kenny v Ireland ROC Limited on the preliminary issue of whether or not the plaintiff constituted a commercial agent of the defendant for the purposes of article 1(2) of EU Council Directive of 18 December 1986 on the coordination of the laws of the member states relating to self-employed commercial agents and the European Communities (Commercial Agents) Regulations 1994 and 1997. LK Shields Solicitors represented the plaintiff in the above matter.

The plaintiff ran the Martello Service Station of the defendant, who was a wholly-owned subsidiary of Esso Ireland Limited, which in turn was a wholly-owned subsidiary of Exxon Mobil Corporation of New York, USA. The plaintiff sold products on behalf of the defendant, which were broadly categorised into two groups, namely, petrol products and non-petrol.

The preliminary issue was whether the plaintiff was the commercial agent of the defendant for the purposes of the Directive and Regulations. The Directive says that a commercial agent 'shall mean a self-employed intermediary who has continuing authority to negotiate the sale or the purchase of goods on behalf of another person, hereinafter called "the principal", or to negotiate and conclude such transactions on behalf of and in the name of that principal'.

The High Court held that three tests must be satisfied in order to qualify as a commercial agent for the purpose of the Directive. First, the agent must be self employed. Second, he must have continuing authority on behalf of the principal. Third, he must 'negotiate the sale or the purchase' of goods. The High Court pointed out that the contentious issue in this case was whether or not the plaintiff negotiated the sale and purchase of goods on behalf of the defendant.

The High Court confirmed the following in relation to negotiation:

• Haggling is not required: 'active bargaining' or 'haggling' is not required to qualify as negotiation. The High Court held out that the definition does not require a process of bargaining in the sense of invitation to treat, offer, counter-offer and acceptance
  
  
• The test: the High Court stated that the proper approach to the question of negotiation was to consider whether the person who may be said to be negotiating has to 'deal with, manage or conduct' the sale or purchase concerned as per the Oxford Dictionary definition and in doing so the person must use 'some skill or consideration'. The High Court ruled that the skill or consideration must, in some manner, be brought to bear on the sale or purchase.

The High Court pointed out that the business of purchase or sale of goods is conducted in very many different ways, emphasising that in some types of business it would be common place for there to be significant bargaining prior to any sale being concluded and in other cases the price will be relatively fixed and the manner in which persons may secure additional sales will be by virtue of other aspects of the way in which the goods are presented to the public, such as through marketing and promotion or by the attractiveness of the presentation of the product. The Court said that the precise way in which a particular type of good is typically sold should not necessarily be a significant factor in determining whether a person engaged in the sale of that good on behalf of a principal in order is to be regarded as a commercial agent.

The test is whether having regard to the manner in which the sale of the goods concerned is carried out, it is necessary for the agent to bring a material level of skill to the activity - in other words, dealing with, managing or conducting the sale or purchase concerned. The skill that may be brought to the activity may vary depending on the way in which the goods concerned are typically sold.

The Court held that in some cases it may involve the skill in bargaining and in other cases it may be the skill in marketing and promotion. It pointed out that in other cases it may be a skill in the presentation of the product in such a way as to make it attractive to members of the public so that they will purchase more of it, thereby encouraging sales.

The High Court held that there was no material difference between an agent who uses a skill in judgement to individually promote a product to one or more identified individual potential purchasers and an agent who (having regard to the nature of the product of the principal which he is involved in seeking to sell) uses more general methods but applies equal skill to making the products attractive to the public generally and thus increase sales.

The High Court found as a preliminary issue that the plaintiff did bring about a material level of skill or consideration to conducting, managing or otherwise dealing with the sale or purchase of products on behalf of the defendant and held that he was acting as a commercial agent of the defendant for the purposes of the Regulations at all material times.

The defendants have lodged an appeal to the Supreme Court against the High Court's decision on the preliminary issue. The appeal has yet to be heard. The High Court has decided to proceed with the hearing on the amount of compensation payable under the Directive despite the appeal.

For further information please contact Marco Hickey.

Confusion has long shrouded this area of the law and countless expert legal minds have struggled with the quandary of how to create an impenetrable fixed charge over book debts. Further compounding this lack of clarity, the point of law has been the subject of conflicting judicial authorities both in Ireland and in the United Kingdom. In June of this year, a ray of clarity shone through the dense fog of uncertainty, when the frequently debated issue came before the UK's House of Lords.

The much-anticipated decision handed down by the House of Lords in National Westminster Bank plc v Spectrum Plus Limited proved to be a double-edged sword. The judgment brought to a conclusion years of controversy regarding this issue, but brutally weakened a banking practice relied upon by lenders for over 25 years.

In the Spectrum Plus case, the House of Lords concluded that it is conceptually possible to create a fixed charge over all present and future debts of a company in certain prescribed circumstances. The key to achieving a valid fixed charge over book debts is 'control'. In order to obtain and maintain the requisite level of control, the lender must exercise control over the uncollected book debts and the proceeds of such debts.

Effective control over the proceeds of book debts can be achieved by the operation of a blocked account. The judgment does not provide guidance as to what constitutes a 'blocked account', but it can be deduced from previous case law, that the key elements are as follows:

• the account is one designated by the parties as a 'blocked account' for the foregoing purposes
  
  
• the proceeds of the relevant book debts are effectively frozen and segregated from other monies held in the account
  
  
• the chargor is prohibited from accessing monies held in the account in the ordinary course of its business or in any way dealing with the account, save with the express consent of the charge holder, and
  
  
• the charge holder exercises sole control over the account.

Furthermore, it is not enough for the charging document to provide for a 'blocked account' if the account is not operated in that manner. Unfortunately, this level of control is inconsistent with the normal operating practices of most businesses. The House of Lords reinforced the decision handed down in the Irish case of Re Keenan Brothers Limited ([1986] BCLC 242 (SC)) with regard to the 'control test' set out therein. The Lords further held that the nature of a charge will not be determined by the label given to it by the counter parties, but rather the form and substance of the arrangement must reflect the intention of the parties to create a fixed charge.

It is evident from the written judgment of the House of Lords, that the Lords appreciate the gravity of this decision from a banking perspective. To that end, the Lords considered that the potentially detrimental impact of this matter on the industry might warrant deviating from normal judicial practice by implementing the judgment with prospective (rather than retrospective) effect. However, following much deliberation, it was the considered opinion of the Lords that to apply the decision prospectively would be to prejudice certain preferential creditors.

The Position Under Irish Law

It must be borne in mind that the position under Irish law diverges from that of the UK. The proceeds of a fixed charge in the UK are paid to the fixed charge holder in priority to all other creditors, including preferential creditors and expenses. However, the priority traditionally enjoyed by those benefiting from a fixed charge in Ireland was significantly diluted by the Finance Act 1986 (as amended by the Finance Act 1995). Under the current legislative regime in this country, the Revenue Commissioners are granted super-preferential status, ranking in priority to fixed charge holders. Section 1001 of the Taxes Consolidation Act, 1997 enables the Revenue to demand payment from the fixed charge holder of certain tax liabilities owed by the chargor. This is generally viewed as an anti-commercial, draconian provision that may, in fact, be unconstitutional. In any case, it significantly diminishes the value of a fixed charge over book debts governed by Irish law. And, as such, the impact of Spectrum Plus is less spectacular in Ireland.

Impact on Irish Banking

Clearly the decision in the Spectrum Plus case is not binding in Ireland, but it will be of persuasive effect when the matter is next considered by the Irish courts. Irish lenders would be well advised to bear the consequences of this judgment in mind when assessing the appropriate levels and form of security to be sought.

Until such time as the Irish courts rule again on this point of law, the position remains as held by the Supreme Court in Re Keenan Brothers, as modified by Re Wogan's (Drogheda) Limited ([1993] 1 ILRM 157) and Re Holidair Ltd ([1994] 1 ILRM 481) and further diluted by section 1001 of the 1997 Act. The prudent course of action for lenders in the interim is to choose a more solid form of security or, failing that, to exercise care (in the context of a fixed charge over book debts) in operating and demonstrating the levels of control outlined herein over blocked accounts.

The possibility of a fixed charge being re-characterised as a floating charge will remain for now a genuine and pressing concern for Irish financiers.

For further information please contact David Williams.

Our Business Law Department is the firm's largest department and forms a key and expanding part of our business.

The department's reputation is of a dynamic, business-friendly and achievement-focused team and is consistently acknowledged by various international publications including The European Legal 500 and PLC Which Lawyer?, where the department and its lawyers have been recognised as having "an aggressively entrepreneurial culture" and as being "a corporate firm par excellence". The department is comprised of ten of the firm's partners, 13 solicitors together with a number of trainees, legal executives and other support staff. The department's resources ensure the provision of a first class quality solution-focused service to our clients. The department comprises a number of very successful specialist units, including banking and financial services, intellectual property, competition, employment, employee benefits and pensions.

Corporate services

• private mergers and acquisitions
• offers for public companies, P2P, PIPE and other hybrid transactions
• public equity, debt fundraisings and initial Public Offerings
• private equity/venture capital
• advising private equity investee companies
• restructurings
• competition (transaction support)
• pensions and employee benefits (transaction support)
• employment (transaction support)
• company secretarial (transaction support)
• retail schemes.

Commercial services

• commercial agreements (to include agency and distribution)
• intellectual property
• competition compliance and structuring
• pensions and employee benefits
• employment
• inward investment
• aviation
• regulated industries
• renewable energy and waste management
• public procurement o life sciences
• healthcare
• company secretarial.

For further information or assistance please contact Laurence K. Shields (Chairman) or Emmet Scully.

Richard Curran

Richard Curran joined the firm as a partner in the Business Law Department on 12 December 2005. Richard qualified as a solicitor in 1996 and is admitted to the Roll of Solicitors in Ireland, England and Wales. Richard has extensive experience in corporate finance, mergers and acquisitions, private equity, project finance and PPP. Before joining the firm, Richard had worked in Dublin, London and Germany.