It is my very great pleasure to welcome you to the latest edition of LK Shields Solicitors' Update. Last February, the firm celebrated its 18th Birthday. On behalf of our entire team, I would like to express our very sincere thanks to all who have supported us over the last 18 years. We are grateful.

From its establishment in February 1988, the firm has grown from an initial staff of 12 to a current staff of 130. To meet its expanding needs, the firm has also recently commenced occupation of another building on Upper Mount Street (no 44). Our 130 staff are now accommodated in six Georgian buildings on Upper Mount Street.

In our last edition, I introduced you to a number of individuals who had recently joined our team and promised further introductions. I am delighted to say that the firm's expansion has continued apace in 2006. In March, we were also delighted to be able to announce the appointment of Gerry O'Hanlon as a partner in the firm's Commercial Property Department.

Our Business Department has seen Seanna McGrann qualify as a solicitor and has also been joined by Deirdre Kilroy. Deirdre qualified in 1999 and specialises in areas including information technology and intellectual property, public procurement and outsourcing.

I'd like to extend a very warm welcome to each and wish them a long and rewarding career with the firm.

Once again, we will have a number of lawyers to introduce you to in the next edition of Update.

As usual, please let us know if there are any topics you would like to see us deal with in future editions of Update.

For further information please contact Hugh Garvey, Managing Partner.

This article discusses the growth in popularity of hedge funds and LK Shields Solicitors' association with the BFT, a Paris based hedge fund manager.

BFT is a relatively small subsidiary of Credit Agricole, with €15 billion assets under management in Paris. In 2001, it embarked on a strategy to manage funds of hedge funds and chose Ireland as the location from which to launch these products for sale to institutional investors inside and outside France. Bruno Nicolai (who has long-standing business dealings in Ireland) led this first phase.

It is fair to say that in the short time that BFT has operated in Ireland, it has contributed to improvements and refinements in the regulations applied by the Irish Financial Regulator to the operation of authorised hedge funds. For its part, BFT appreciates the principled based way the Irish Financial Regulator considers technical innovations submitted from time to time by BFT.

BFT scored a major achievement within the Credit Agricole Group in the last 18 months by receiving approval within the group to engage directly in the management of hedge fund strategies. This approval brings high recognition within the Credit Agricole Group of the technical fund management capabilities of the team within BFT, led by Georges Emmanuel Aubry, who has been responsible for own account trading of BFT's book, where he has been head of treasury since 1993.

The asset management business of BFT is led by Stιfan Narbutas, who has assembled an alternative asset management team of 30 professionals including investment managers, economists, analysts, and very ably supported on the legal side by Raphaelle Bachelier in Paris. Stefan has built this very impressive alternative asset management team in Paris in conjunction with his overall responsibilities for the management of BFT's main existing business of managing traditional-style bond and equity funds.

We at LK Shields Solicitors have been privileged to participate closely on the product side of BFT's hedge fund initiative and have assisted in the creation and launch of four individually-constituted hedge funds focused on four families of strategies:

• global macro
  
  
• equity hedged
  
  
• credit arbitrage
  
  
• fixed income arbitrage.

This has been a very significant exercise for us and has taken more than 18 months to bring to successful completion, with the receipt of approval from the French regulator for BFT's hedge fund team in Paris and from the Irish regulator for the four hedge fund companies established by BFT in Dublin.

The continuing shift in emphasis toward direct hedge fund management within BFT mirrors the major evolution within the investment funds industry that is currently underway, in which the leading participants recognise that the story is not any more about hedge funds at one end of the spectrum and investment funds at the other end - rather it's about modern asset management.

For further information please contact David Williams.

Most of us buy brands rather than products, so how can you be sure that your brand is as safe as Fort Knox? By registering it as a trade mark.

Coca-Cola is not just a soft drink; it is a brand that is readily identifiable by millions of people all over the world. As such, it is of immense financial importance to the Coca Cola Corporation.

But all too often people assume that once they have registered their business name their rights are protected. That could be a costly mistake. If you start marketing goods or services without appropriate trade mark protection, you might find yourself with a wasted investment. If someone else already holds a trade mark for the product or service you're marketing, you could find yourself legally restrained from pursuing your business. Likewise, without appropriate trade mark protection, your brand could be copied or used by someone who may appreciate its full potential more than you do.

A trade mark registration allows the owner to prevent third parties from using an identical or similar mark in respect of identical or similar goods or services where this is likely to create confusion. Trade mark protection can cover not only names and symbols but also slogans, colours, shapes and even smells. This protection lasts for ten years and can be renewed at ten-year intervals.

In order for a brand to be registered as a trade mark, it must be distinctive (or capable of being distinctive). In general, descriptive brands are not capable of trade mark protection, so you can't register APPLE for apples, but you can register APPLE for computers! It is equally important to ensure that no-one else has rights in whatever name or brand you choose to register as a trade mark. This can be done by carrying out pre-clearance searches, which can be carried out by your trade mark agent. We would strongly recommend that searches are be carried out as they may well help avoid legal difficulties down the road.

Once searches have been completed, and assuming no insurmountable problems have been revealed, your trade mark advisers will prepare what is known as 'a goods/services specification', which sets out the goods and services on which the mark is or will be used, such as soft drinks, computers, restaurant services and so on. As the registered trade mark will give you protection only for the goods and services included in the specification, it is important to ensure that all the goods and services on which you are likely to use your brand are included. For example, if you wish to protect your name for use on clothing, you must register the mark for clothing. But if it is part of your future plans to use the brand also on watches and perfume, for example, it would be wise to seek protection in these classes of goods from the outset.

Enforcement

One benefit of trade mark protection is that it enables you to protect your brand. However, there is not much point in registering a trade mark if you allow other parties to use the mark without objection. It is imperative to get legal advice immediately if you become aware that your trade mark is being used without your permission. A trade mark will only remain exclusive provided third parties are prevented from using it. If you allow your trade mark to be infringed, you may ultimately encounter problems when you do seek to enforce your rights to protection.

The registration and enforcement of your brand is key. Making a trade mark application is normally a relatively painless task, and the exclusivity conferred by a trade mark registration can reap unforeseeable financial awards. Licensing and franchising business models are built on the foundation of a solid brand and trade mark - McDonalds, Starbucks, O'Brien's Sandwich Bars, the list is endless.

Brands create trust, goodwill and ultimately loyalty. Therefore, you must do your utmost to protect your brand, so go on - get yourself registered and start making your fortune!

Where should you make your mark?

You need to decide in which jurisdictions you wish to register your trade mark. Trade marks are territorial in nature and so an Irish-registered trade mark will only give you protection in Ireland. If you require protection in other jurisdictions, registration should be sought in those countries. A Community trade mark confers registered trade mark protection in all of the 25 EU member states, and if you require protection in a few EU countries a Community trade mark may be the most viable option. There is also the possibility of securing an international trade mark, but for such protection you must choose the individual countries in which you would like to seek protection.

For further information please contact Eoin Cunneen or Aine Matthews.

An examination of the concept of the business equity in business tenancy agreements as well as recent Government proposals on renewal rights.

Business tenants who are renting or leasing from commercial landlords are entitled to renew their new tenancy agreements if 'a business equity' has been established between the parties. Under the Landlord and Tenant (Amendment) Act 1980 (the 1980 Act), such tenants will acquire a business equity if they have continuously occupied the premises and carried on business there for five years.

'Business' is defined broadly in the 1980 Act as 'any trade, profession or business, whether or not it is carried on for gain or reward, and any activity for providing cultural, charitable, education, social or sporting services'. It could be argued, then, that almost anything could be a business, until the contrary is proven.

Where the right to a new tenancy is based on a business equity, the duration of the new tenancy will be fixed at 20 years (or such lesser term as the tenant may nominate), but the term cannot be fixed for a period of less than five years without the landlord's agreement. In default of such agreement, the term will be fixed by the courts.

The tenants of an office can contract out of their right to a new tenancy if they have obtained independent legal advice, but a number of conditions must be met:

• the premises must be a business premises
  
  
• it must be wholly and exclusively for office use
  
  
• the tenant must validly renounce its entitlement to a new tenancy before the term of the new tenancy starts
  
  
• the tenant must receive independent legal advice on the matter.

Surprisingly, the legislation contains no definition of what constitutes an 'office' and indeed may be flawed in that it appears to say that a tenant of an office with ancillary non-office use cannot contract out of the provisions of the 1980 Act.

The 1980 Act expressly provides that any attempt to contract out of the Act other than in relation to an office premises is void, so landlords have developed avoidance methods to prevent tenants from acquiring statutory rights of renewal, such as the provision of short-term business letting agreements, usually for a period of four years and nine months. Often, even if the lease is renewed at the end of a short-term business letting, the tenant is required to move temporarily to other premises in order to break the period of occupation and prevent renewal rights arising. These avoidance measures have led to difficulties in the property market.

In an effort to remedy these problems, the Government has introduced section 57 of the Civil Law (Miscellaneous Provisions) Bill 2006. This section would enable any business tenant, and not just where the premises are let as office accommodation, to contract out of its right to renewal under the Landlord and Tenant (Amendment) Act 1980. If enacted, it will enable landlords to grant leases for longer than five years without the risk of being statutorily obliged to renew the lease.

This would provide tenants with more certainty and give them a reasonable length of time to realise the benefits of any investment made by them in the premises, such as repairs, improvements, fitting out and goodwill. The problems in relation to mixed-use tenancies will also be avoided if this new change is introduced.

It is hoped that the proposal to extend the right to contract out will be enacted before the end of the calendar year.

What the Government Thinks

The Minister for Justice, Equality and Law Reform Michael McDowell has said: 'The proposal … is a deliberate policy change to meet the dynamic market economy that exists in the State. It is intended to allow greater flexibility than at present in the arrangements which business landlord and tenants choose to make between each other. At the same time, it maintains a good balance between sometimes competing interests by ensuring that tenants cannot sign away the protections at present afforded by the law without first having obtained independent legal advice in the matter'.

For further information please contact Gerard O'Hanlon.

Last year, the Government passed legislation to stop tenants buying out a freehold interest in State property. Now it has moved to protect the owners of private property.

Readers may be aware that the Landlord and Tenant (Ground Rents) (No 2) Act 1978 (the 1978 Act) was amended last year by two separate pieces of legislation, namely the Landlord and Tenant (Ground Rents) Act 2005 and the Maritime Safety Act 2005 (collectively referred to below as the 2005 Acts).

The 1978 Act had allowed tenants in certain circumstances to purchase a freehold interest in their property. It was widely reported that certain tenants of State-owned property had created legal devices to buy a freehold interest in their property, even though the leases under which they held their interest were structured to prevent them from doing so. A tenant could create a sub-lease to a 'related' third party which was structured in such a way as to allow the 'related' third party to come within one of the categories of tenants permitted to buy a freehold interest in their property, despite the fact that the tenant from whom they took the sub-lease was not permitted, under the terms of its lease, to buy a freehold interest at all.

The 2005 Acts amended the 1978 Act to provide that it would not be binding upon a Government Minister, the Commissioners of Public Works in Ireland, the IDA, Shannon Free Airport Development Company, Udaras na Gaeltachta or a 'company' within the meaning of section 2 of the Harbours Act 1996 (which includes companies operating Irish ports). Although the 2005 Acts brought in protections for certain State-owned property, some commentators noted that private owners of valuable properties (such as shopping centres) faced similar risks to their freehold interests. The Registration of Deeds and Title Act 2006, which has just been enacted by the Houses of the Oireachtas, contains provisions intended to protect freehold owners, where the acquisition of the freehold interest by the tenant was neither intended nor foreseen under the Landlord and Tenant (Ground Rents) Acts 1967 to 1987.

The 2006 Act amends section 16 of the 1978 Act to prevent a sub-lessee from acquiring a freehold interest where a tenant who is not entitled to acquire a freehold interest in their property has granted the sub-lease. This is intended to prevent tenants of 'non-eligible' leases from creating 'eligible' leases to 'related' third parties (such as companies within the same group) to enable the 'related' third party to buy a freehold interest in the property. The legislation affects all sub-leases granted on or after 27 February 2006.

The Registration of Deeds and Title Act 2006 also amends section 28 of the 1978 Act to restrict the extinguishment of covenants on the acquisition of a freehold interest to those covenants affecting the land in the lease under which the land was held. This will mean that covenants outside the lease in question will no longer be extinguished on the acquisition of the freehold interest. The Law Reform Commission in its 1989 report on land law and conveyancing law had pointed out that the original section 28 was too widely drafted in that it allowed a party, in certain circumstances, to abolish covenants that it had entered into with another person to protect the amenities of that other person's land without that person's consent. The legislation affects all applications or notices of intention to acquire a freehold made or served after 27 February 2006.

For further information, please contact Gerard O'Hanlon.

A new code of practice designed to improve access to part-time work was introduced earlier this year. The main recommendations are outlined below.

Since 12 January of this year, a new code of practice has been in place to promote the development of policies and procedures relating to part-time work and to stimulate wider access to the part-time option. The code, which was prepared by the Labour Relations Commission, also aims to promote discussion and encourages employers and employees to address any barriers to part-time working that may exist within the workplace.

A 'part-time employee' is defined as an employee whose normal hours of work are less than the normal hours of work of a comparable employee. There is no statutory entitlement to work part-time under the Protection of Employees (Part-Time Work) Act 2001 or elsewhere in Irish law, and where such requests are made to an employer it is a matter to be agreed between both parties. But the new code encourages employers to treat such requests seriously and, where possible, explore with their employees if and how requests can be accommodated. Any consideration by an employer of a request for part-time work has to take into account the business needs of the company.

If the request is successful, details of how the arrangement will work should be discussed with the employee and indeed with other work colleagues, if appropriate. The code of practice recommends that an agreement should be drawn up between the parties, setting out any changes to the terms and conditions of the contract of employment that may arise. If the request for part-time work is refused, the grounds for doing so should be made clear to the employee, who should have recourse to an appeals mechanism, for example, through the company's established grievance procedures.

The code of practice operates on some basic principles:

• it is applicable to all employers and employees
  
  
• access to part-time work should be available as far as possible across different levels in the organisation
  
  
• as far as possible, employers should give consideration to a request by employees to transfer from full-time to part-time work
  
  
• requests by employees to transfer from part-time to full-time work or to increase their working time, should the opportunity arise, should be given favourable consideration
  
  
• part-time workers should suffer no diminution of status or employment rights generally, with the exception of pay, benefits and so on.

Implementation of the code of practice relies on the full commitment of employers, employees and their representatives. Employers should ensure that they have clear and objective criteria for identifying part-time work opportunities, and procedures for adopting them to meet the needs of employees. The employer should consider the implications of part-time working for the organisation and communicate the working arrangements to all staff. Equally, employees (and their representatives) must work within the policy guidelines agreed for part-time working, recognise that not all positions may be suited to part-time working and, where this is so, accept that the part-time work must be performed to the standard set by the employer.

Finally, it is important to note that the code may be submitted at any proceedings before a court, the Labour Court, the Labour Relations Commission, the Employment Appeals Tribunal, a Rights Commissioner, or an Equality Officer. As the code is admissible in evidence, any of its provision that appear relevant to any question arising in proceedings may be taken into account in determining that question. It is therefore prudent for employers to take note of the code; it should not be dismissed or ignored. The Labour Relations Commission's code of practice on part-time working sets out the benefits for both parties.

Benefits of Part-Time Work

For the employer:

• valued and experienced staff are retained, and training and recruitment costs reduced
  
  
• a wider range of candidates for vacancies is available
  
  
• work needs and staffing are matched more closely
  
  
• productivity is improved and absenteeism reduced
  
  
• employee commitment, morale and loyalty are enhanced.

For the employee:

• greater sense of responsibility, ownership and control of working life
  
  
• better relations with management
  
  
• improved job satisfaction
  
  
• better work life balance and reduced stress.

For further information please contact Jennifer Clarke.

The Competition Authority has lost its bid to restrict the choice of legal representatives available to those appearing before it.

In August 2004, the Competition Authority published a notice entitled Notice in Respect of Legal Representation of Persons attending before the Competition Authority. Article 3 of the Notice specified that the Competition Authority was of the view that the integrity of its process was compromised by the fact that the same lawyer could represent more than one person in a particular matter, be it two parties to an investigation or a party to an investigation and a witness relevant to that investigation. The Notice stated that the Authority would not allow the same lawyer to represent both parties.

The Law Society of Ireland brought an action seeking a judicial review of the relevant parts of the Notice, and the High Court delivered its judgment in the case of Law Society of Ireland v the Competition Authority on 21 December 2005. The High Court held as follows:

1. That the Competition Authority did have the power to publish notices of the kind under consideration in the proceedings
   
   
2. That there is a strong presumption in favour of freedom of choice of representation in civil proceedings such as the type conducted by the Competition Authority. The court held that a person facing a tribunal where it is appropriate to have legal representation does have a constitutional right to freely to select the lawyers that will represent him. It also held that the appropriate balance between the constitutional right of a person to freely choose his legal representatives and the right of the tribunal to control its proceedings so as to discharge its functions in accordance with the constitution and the law is achieved by the strong presumption in favour of freedom of choice of legal representation but that the tribunal retains a discretionary discretion right to deny that freedom of choice where it is apparent that to permit a particular legal representative to act would frustrate or impede it. The High Court held that in all types of proceedings - and in particular proceedings of a civil nature - the likelihood of a choice of legal representative being an obstacle to the proper conduct of the proceedings 'would be rare indeed'. It was held that the general prohibition contained in the Notice was not justified in this case. The Competition Authority had impermissibly reversed the presumption as an essential aspect of the right to fair procedures in favour of the freedom of choice of legal representatives and in doing so impermissibly infringed the right of a person appearing before them either under investigation or as a witness to choose their own legal representatives.
   
   
3. The High Court held that the relevant provisions of the Notice also infringed Article 6(1) of the European Convention on Human Rights, which guarantees the right to a fair trial.

For further information please contact Marco Hickey.

The controversial Groceries Order 1987 has been repealed by the Competition (Amendment) Act 2006. One of the most discussed aspects of the Groceries Order was the ban on below-cost selling. More specifically, the Groceries Order prevented retailers from selling 'grocery goods' at a price that (after the deduction of the cost to the retailer of any discount or other benefit given by him on the sale of the goods) was less than their net invoice price. The 'below cost selling' ban had been criticised in many circles as being contrary to consumer interests and a great deal of media attention focused on this aspect of the Groceries Order.

For further information please contact Marco Hickey.

The Finance Act 2006 contains good and bad news on pension funding.

First, the good news. Increased rates of contributions were brought in to benefit those over age 55. The revised level of contributions as a percentage of earnings (up to the annual earnings limit of €254k as indexed each year) that individuals may pay into their pension vehicles is set out in the table below:

Taxpayers who were unable to afford to pay into their pension funds when they were at a younger age now have the opportunity to catch up.

Now, the bad news. The Act restricts the capital value of pension benefits that may be drawn down. The general position is that if at the time of draw-down the value of the pension assets exceed €5 million, tax at penal rates will apply to the excess. The Minister may index this threshold of €5 million as and from 2007. Special relieving provisions apply for those whose pension assets were valued at over €5 million at 7 December 2005 (Budget Day).

Where an individual's pension assets exceed €5 million at 7 December last, the larger value is then described as a personal threshold. This larger value is capable of replacing the €5 million threshold. If at time of draw-down the personal threshold is exceeded, the excess will be subject to penal rates of tax.

It is essential that anyone who considers their personal pension assets may be worth €5 million or more as at 7 December last establishes its value. Where the value is in excess of this amount, the individual must notify the Revenue by 7 June 2006.

Implications of New Cap

The new regime undoubtedly means that pension schemes will no longer be the tax shelter they once were as far as the minority of top earners is concerned. Also, pension schemes operated for owner-managers will be closely scrutinised to ensure that relevant thresholds are not exceeded.

The Finance Act also introduced new restrictions that put beyond doubt that a pension scheme may not acquire property to be used as a holiday home or a residence of a scheme member or someone connected to a scheme member. And, crucially, it also introduces new rules that place further restrictions on approved retirement funds (ARFs). ARFs are investment vehicles that certain types of pension savers are permitted to establish instead of drawing a pension from their pension vehicle. If the ARF acquires property that is to be used in connection with the business of the ARF holder or for a person connected with the ARF holder, the property is regarded as being distributed out of the ARF giving rise to a tax charge.

Previously, where an ARF was set up, the individual did not have to draw down any income from it. The Finance Act gives effect to changes announced in the budget to impute a 3% distribution to the value of the assets in the ARF on 31 December each year. A transitional measure is introduced so that the 3% rate is phased in over the period 2007 to 2009, with 1% applying in 2007, 2% in 2008 and the full 3% in 2009 and each subsequent year. The new regime applies to ARFs created on or after 6 April 2000 where the ARF holder is 60 or over for the whole of the tax year.

In the past, certain high net worth individuals did not draw down any income from their ARFs but used them as wealth management and estate planning tools. These new rules will be certain to mean that the minimum amounts will be drawn down, thus eroding the capital value of the assets within the ARF.

When an ARF is established, the taxpayer can take one quarter of its value as a tax-free lump sum. With the introduction of the new €5 million limit, this amount is subject to a new ceiling of €1.25 million. Drawn-down cash in excess of €1.25 million is subject to income tax at the individual's marginal income tax rate.

The message is clear. It's up to us all to avail of the new contribution limits and provide for our retirement. However, the values being put away need to be monitored in case the returns are more than what is regarded by the Government as acceptable. In those cases, corrective action may be required or else the tax bill will be significant.

For further information, please contact Fiona Thornton or Gillian Dully.

With our growing population, healthcare has become a diverse and expanding area of investment. Below we analyse the recent merger and acquisition activity in this sector.

The last few years have seen a marked increase in merger and acquisition activity in the healthcare sector in Ireland. This can be seen as the result of a number of factors, such as the attractiveness of Ireland as a base for the pharmaceutical industry and the approach of the government towards the privatisation of hospitals and care facilities. The main areas of growth are the pharmaceutical industry, healthcare staff providers, and healthcare facilities.

In the area of healthcare staffing and recruitment, the CPL Resources group acquired Nursefinders UK Ltd, a London-based nurse placement agency, as part of its development of its medical recruitment specialists brand.

In the pharmaceutical sector, the major merger was between Boots and Alliance UniChem. The merger is said to create a healthcare group with sales in excess of €19.14 billion. The DCC marketing and distribution group acquired 76% of Physio-Med, a UK-based supplier of physiotherapy and related products, for €8.5 million. The Dublin-based medical and healthcare research company Alltracel acquired UK company Westone Product Limited in 2004. Westone is a supplier of dental and oral care products to Europe, Asia and the United States.

The three main pharmaceutical distribution companies in Ireland are Celesio, Uniphar and United Drug. Celesio, the German-based owner of the Unicare pharmacy group, is said to be focusing on the Irish market at the moment. It has already acquired the Crowley's and Ryan's chain of pharmacies, as well the 29 outlets in the Unicare chain of pharmacies in 2000, and is said to have increased Irish sales of 12% to €578 million in 2004. One of Celesio's main rivals is the pharmaceutical distribution group Uniphar, which acquired the Whelehan Group in 2004 in a deal that is estimated to have been valued at between €45-50 million.

The other major rival is pharmaceutical group United Drug, which acquired TD Packaging Limited in the UK for €17 million last year. United Drug is a healthcare services provider to pharmaceutical retailers and manufacturers in the UK and Ireland.

The start-up pharmaceutical company Azur Pharma, led by Seamus Mulligan, formerly of Elan, is said to have €40 million available to pursue acquisitions in this sector also.

Healthcare Facilities

A significant deal in this area was Barchester Healthcare's acquisition of rival company Westminster Healthcare for €757 million. Barchester Healthcare is owned by Irish bloodstock and racing tycoons John Magnier and JP McManus, who together own 50% of the company, along with Irish financier Dermot Desmond and former Kerry Group chief executive Denis Brosnan. Barchester Healthcare is a British nursing home company that is now interested in buying the Priory chain of psychiatric clinics in the UK, worth an estimated €965 million.

Goodbody Stockbrokers projected last year that healthcare consortiums were poised to invest more than €1.5 billion in new hospitals in Ireland. The government has adopted a policy of encouraging private investment in the healthcare sector, including plans to transfer existing private beds in major public hospitals to new private facilities that will be developed at existing public hospital sites around the country. The government has introduced tax incentives and allows hospital developers to sell the capital allowances associated with the costs to investors in order to raise the necessary equity. At least 20% of the private facility's beds (including private hospitals, private convalescent facilities, nursing homes and sports injury clinics) must be made available to public patients.

As you can see, this is a diverse and expanding area of investment. As Ireland's population continues to grow, and the healthcare sector has the support of the government, it is likely that this will continue to be a major area of merger and acquisition activity. Medical software Dublin medical software firm Medicom paid almost €2 million for the general practice business of rival firm Quantum Healthcare. It is estimated that this will secure its place as one of the largest healthcare software businesses in Ireland, with a turnover in excess of €4 million. It has been reported that Medicom is interested in acquiring other such companies in order to consolidate its position.

For further information please contact Marco Hickey.

(Source information from The Irish Times and The Sunday Business Post.)

The concept of collaborative law was first introduced to Ireland in 2004 when a basic training course for solicitors was held in Dublin.

A recent issue of Update (Autumn 2004) contained an article explaining in detail the collaborative law process, a new dispute-resolution model whereby spouses who have experienced marital breakdown retain separate specifically-trained solicitors to help settle disagreements through a number of four-way settlement meetings attended by both clients and solicitors. Collaborative law solicitors cannot act for the parties in litigation if the negotiations break down, so the negotiations take place without the threat of litigation hanging over the parties' heads.

Since 2004, collaborative law has grown from strength to strength, with further basic and intermediate training courses held in other parts of the country. It is estimated that approximately 140 legal professionals (including solicitors, barristers and mediators) have now received training in collaborative law in this country.

An Association of Collaborative Practitioners (www.acp.ie) has been established and it has prepared framework documentation for member solicitors participating in collaborative cases. Collaborative law is growing in popularity, and there are now a number of collaborative cases ongoing in Cork and Wicklow. Solicitors in Dublin, as well as other parts of the country, are also suggesting collaborative law to clients as an alternative to litigation.

LK Shields Solicitors is one of the growing number of firms in Dublin which now offers collaborative law to clients seeking a separation from their spouse as an alternative to the traditional litigation model.

For further information please contact Rachel Murphy.

Last year's Fyffes case was the longest running insider dealing trial in Irish legal history. What it was all about?

On 21 December 2005, Ms Justice Laffoy issued her long-awaited judgment in Fyffes' multi-million euro insider dealing action against Jim Flavin and his company, Development Capital Corporation plc (DCC) and two of its subsidiaries. This was the largest insider trading case to date in Ireland and the judge's decision followed 87 days of evidence in the High Court.

In February 2000, DCC sold approximately 35.8 million Fyffes shares through its Dutch subsidiary Lotus Green at a record high and netted a profit of €85 million. DCC boss Jim Flavin was a director of Fyffes at the time.

On 20 March 2000, Fyffes issued a profit warning, largely due to underperformance in the banana trade and currency movements. Shares fell that day to €2.70 (from €3.16 on 17 March 2000), and ongoing unease over Fyffes' online fruit marketplace, Worldoffruit.com, resulted in the share price falling to €1.85 by the end of April 2000.

Fyffes brought a claim in January 2002 against DCC, Jim Flavin, and two DCC subsidiaries - S&L Investments Limited and Lotus Green - claiming that Jim Flavin used insider information to sell the shares prior to the collapse in the share price. Fyffes' legal team argued that Jim Flavin, as a director of Fyffes, was in possession of information about the trading performance of the company, which, if in the public domain at the time DCC sold its shares, would have reduced the value of the Fyffes shares.

In its defence, DCC claimed that the controversial share trade was undertaken by the Dutch holding company Lotus Green and that Flavin had no hand, act or part in the trade except to pass on the interest of stockbrokers. It also argued that the information possessed by Mr Flavin was not price-sensitive information - in other words, even if the information Mr Flavin held had been made public, it would not have materially influenced the value of the Fyffes shares.

The Judgment

In her 367 page judgment, Ms Justice Laffoy determined that the two critical issues to decide were:

1. whether or not Mr Flavin 'dealt' in Fyffes' shares
   
   
2. whether or not Mr Flavin possessed price-sensitive information at the time the shares were sold.

On the first issue, she held that Mr Flavin did 'deal' in Fyffes' shares in relation to the sales in February 2000, and that it was clear that he controlled the whole process of selling the DCC shareholding in Fyffes. In her view, the specific transactions would not have occurred but for the fact that Mr Flavin acted as he did.

On the second issue, however, she unequivocally held that Mr Flavin's dealing in the shares was not an unlawful act, as he did not possess price-sensitive information about the shares. It was held that the dealing was not unlawful, and that no civil liability arose under Part V of the Companies Act 1990 to account for profits.

A third issue considered by Ms Justice Laffoy was whether or not Mr Flavin had acted in breach of his fiduciary duties to Fyffes. She held that he had not because, in her view, he did not use the allegedly confidential and price-sensitive trading information in dealing in the Fyffes shares.

Group Structure

In what may yet prove to be the most significant part of her judgment, Ms Justice Laffoy looked at the circumstances in which a group of companies can be treated as a single corporate entity. Despite the fact that Lotus Green was not set up with the intention of evading a legal obligation or to facilitate insider trading, the judge held that not to treat DCC and Lotus Green as one corporate entity would result in the DCC Group evading its obligations under the insider trading provisions in Part V of the Companies Act 1990.

When delivering her decision on costs in this case, Ms Justice Laffoy said the approach adopted by DCC on the dealing issue deliberately ignored the reality that Mr Flavin's connection with Fyffes was attributable to DCC's ownership of the shares in Fyffes, and that those shares were owned and sold, and the profit generated was owned, by the DCC Group. Accordingly, although she awarded the bulk of the costs of the action to DCC, including reserved costs, she disallowed the costs of 25 days, meaning DCC will have to pay its own legal costs for that period.

Although the insider trading provisions which were analysed by Ms Justice Laffoy have since been superseded by a new regime for market abuse (which consists of the EU Market Abuse Directive 2003, the Investment Funds, Companies and Miscellaneous Provisions Act 2005, and the Market Abuse Regulations 2005), the new provisions overlap with the old regime to a significant degree, and so the judgment of Ms Justice Laffoy will still be relevant. Possible appeal? In early April 2006, the board of Fyffes indicated that it will be appealing Ms Justice Laffoy's decision in the High Court. In an accompanying press statement, Fyffes said that the decision to appeal 'follow[ed] a detailed analysis of the judgment by the directors and by the company's counsel.' LK Shields Solicitors will advise of any further developments in this case in a later edition of Update.

For further information please contact Emmet Scully.

Deirdre Kilroy

Deirdre Kilroy joined us earlier this year. Deirdre, who qualified in 1999, practises in the area of commercial law. Working in our Business Department, she has considerable amount experience and expertise, particularly in the areas of information technology, data protection, intellectual property, outsourcing, e-commerce, public procurement, media and advertising.