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Code of Conduct between Landlords and Tenants for Commercial Rents

The Department of Business, Enterprise and Innovation published a Code of Conduct between Landlords and Tenants for Commercial Rents (“the Code”).

The Code will remain in place until the 31st July 2021.

Objective

The Code acknowledges that commercial landlords and tenants have a common interest to work together to enable businesses to continue operating during the Covid-19 pandemic.

The purpose of the Code is to promote engagement between the parties with a view to achieving mutually beneficial outcomes.

The Code is a voluntary code with no statutory basis. However, landlords and tenants are urged to act in an open and transparent manner and to provide each other with sufficient and accurate information within the context of negotiations to achieve outcomes consistent with the Code.

Information

Tenants seeking concessions are encouraged to explain the basis for their request and to provide supporting financial information to the landlord.

Un-controversially, while the Code (as expected) requires a tenant to provide financial information, interestingly (and perhaps controversially), the Code also states that each party should provide “sufficient and accurate information” to the other. This begs the question whether, in the context of negotiations, the landlord would be expected to share with their tenant the fact of and information relating to loan deferrals or other supports received by the landlord. In circumstances where the Code envisages parties negotiating in good faith, a landlord could find it difficult to withstand a request for such.

Landlords are encouraged to provide concessions, if possible, having regard to their own fiduciary duties and financial commitments. The Code acknowledges that in certain situations, the landlord may not be able to provide such assistance.

Options

The Code sets outs a non-exhaustive list of options for new arrangements which could be agreed between landlord and tenants.

These options include;

  • agreeing full or partial rent- free periods;
  • landlords drawing from rental deposits on the understanding that the landlord will not then require that the deposits be replenished before it is reasonable and realistic to do so;
  • landlords waiving interest on unpaid rents or rents paid in arrears to make payments plans more affordable;
  • landlords and tenants agreeing to split the cost of the rent for any unoccupied period in the premises.

In terms of service and insurance charges, the Code acknowledges that these should be paid in full in order to keep well- maintained properties. However, given the current economic climate, the Code also provides guidance as to how these payments may be facilitated and/or reduced.

Mediation

The Code suggests that the alternative dispute mechanism set out in the lease be used. Invariably, such provide for arbitration. Arbitration can be as lengthy and costly as (if not more so) litigation.

As an alternative, the Code suggests mediation in situations where landlords and tenants have followed the Code’s principles, have not reached any agreement, but believe a resolution could be found through alternative dispute resolution mechanisms. The Code provides that the landlord and tenant should bear their own costs of the mediation and that the process should not prolong or frustrate attempts to reach an amicable solution.

This briefing note is not intended as legal advice. For specific queries, please liaise with Cómhnall Tuohy at ctuohy@kanetuohy.ie or Dorothy Cleary dcleary@kanetuohy.ie  

 

Vacancies

Kane Tuohy LLP is recruiting for the following 2 positions:-

Real Estate Solicitor

Kane Tuohy LLP is a commercially focused legal practice that provides cost effective practical legal advice primarily to corporate clients operating in Ireland.

The Real Estate Team is looking to engage a Real Estate Solicitor with 3-7 years PQE to join its growing team.

Candidates should have a broad range of real estate experience and, in particular, the areas of conveyancing, landlord & tenant and property development.   The candidate should have strong organisational, interpersonal and communication skills and a proven ability to work effectively both within a team environment and on their own initiative.   The successful applicant will directly report to the head of Real Estate in Kane Tuohy LLP and shall work closely with him.   While a proven record of business and client development is important, the appetite and ambition to generate new clients and business will be given equal weight and will be supported and encouraged.

The role represents an opportunity for genuine career development and advancement for the right candidate.

Salary will be commensurate with experience.  If you are interested in the role, please email the following address: mbarron@kanetuohy.ie

Legal Secretary/PA

Kane Tuohy LLP is looking to recruit a Legal Secretary/PA to join their busy practice. The successful candidate will primarily provide secretarial and PA support to the Senior Partner and will also support the litigation team on an as needed basis.

Salary is negotiable depending on the level of experience.

Duties:

  • Prepare documentation from digital dictation
  • Assist the team in the creation and preparation of detailed court documentation
  • Diary management for the Senior Partner
  • Timely follow up on client queries, both in person and over the phone
  • Dictaphone typing
  • File management, including electronic filing, scanning, photocopying and archiving
  • Ad-hoc PA support as needed

Ideal Candidate:

  • A minimum of 2-4 years experience as a Legal Secretary
  • Proficiency in MS Officer Suite: PowerPoint, Excel, Word and Outlook
  • Strong typing skills
  • Flexibility and a ‘hands on approach’ to any given task
  • Ability to deliver high quality, accurate work in a timely manner
  • Highly organised with exceptional attention to detail
  • Discretion, and a demonstrated ability to handle sensitive client information

Please apply via email: mbarron@kanetuohy.ie

Warning for Employers who Re-Open Workplaces when Lockdown Restrictions Eased

Many employers are anxiously awaiting directions from the Irish Government as to when they can re-open their businesses and/or operate their businesses at normal capacity.

Employers and employees alike should be mindful that the workplace post-Covid 19 lockdown will be very different to what they are used to and this is highlighted in the recent French case in which Amazon were ordered to stop selling “non-essential” items or else face hefty fines of €1,000,000 a day.

Amazon was sued by a French trade union on foot of some of its employees in France being diagnosed with Coronavirus where one employee was hospitalised as a result of being infected with Covid -19.

A French Court in Paris directed Amazon to establish a health and safety plan to protect its employees and although Amazon has appealed this ruling (which is suspended pending appeal), Amazon has closed six of its warehouses in France.

This case is a warning to Irish employers to ensure that they adequately protect the health and safety of their staff in the workplace and ensure physical distancing is adhered to by employees, suppliers and customers alike in the workplace. Failure to do so could result in employees refusing to attend work (so as to protect their health and safety) leading to a decrease in work production, formal grievances by employees or could even result in personal injury claims against the employer if an employee is infected with Coronavirus as a result of the employer’s failure to adequately protect employees at work.

The Irish Response – Return to Work Safety Protocol

On the 8th May 2020, the Department of Business, Enterprise and Innovation and the Department of Health published the “Return to Work Safety Protocol”, which is designed to support employers and employees to put measures in place to help prevent the spread of Covid-19, when the economy begins to re-open.

The Protocol outlines several measures which employers should implement in their workplaces to reduce the spread of the virus. These measures include updating company policies to outline the procedure for dealing with suspected cases of Covid-19 in the workplace, requiring employees to complete return to work forms prior to returning to work (to confirm that the employee has no Covid-19 symptoms, is not self-isolating or awaiting test results) and ensuring physical distancing in the workplace (for example, staggered breaks and working in small teams, if group work is necessary in work).

Furthermore, businesses will also be expected to implement more stringent cleaning regimes in work which could be an issue for small businesses who may have limited resources to pay for cleaning services.

It is anticipated that as part of the Irish Government’s lockdown exit strategy that the Health and Safety Authority may be given additional powers to inspect workplaces and shut down those workplaces which are not adhering to physical distancing measures.

Comment

In light of the recently published Return to Work Safety Protocol, we would encourage all employers to take this time to carry out workplace risk assessments as well as updating their workplace policies so as to provide guidance to employees as to what measures to take in the workplace post-Covid 19 lockdown, in line with the Protocol.  Employers should engage in this task now before re-opening their businesses and/or operating their businesses at normal capacity.

If you are unsure as to what measures to take or how to go about updating/drafting workplace policies, our Employment Law team are here to help and can guide you through these challenging times.

This Article is not intended as legal advice. For specific queries, please liaise with Cómhnall Tuohy whose details are set out below.  

 

AUTHORS:

 

Cómhnall Tuohy, Partner

E:  ctuohy@kanetuohy.ie

M: 087-2194782

 

Jenny Martin, Senior Associate

E:  jmartin@kanetuohy.ie

M: 087-1184575

 

Rita Higgins, Solicitor

E:  rhiggins@kanetuohy.ie

M:  087-4141509

 

 

Has the State Created a “Moral Hazard” for Directors?

The outbreak of Covid-19 has presented significant challenges for businesses and has caused severe business disruption. The Irish government has introduced new measures in the hope of mitigating the effects of Covid-19 on the Irish economy.

As part of these measures, the Government announced on the 2nd May 2020 that the Revenue will “warehouse” deferred tax debts associated with the Covid-19 crisis to assist small and medium-sized enterprises (SMEs) who may be experiencing cashflow problems and trading difficulties at this uncertain time.

New Revenue Scheme

This new scheme involves the effective parking of any unpaid VAT and PAYE (Employer) tax debts which arise as a result of the Covid-19 crisis, for a period of 12 months after businesses return to trading.  In addition, a year after a business has returned to trading, a lower interest rate of 3% per annum will be placed on such “warehoused tax debts”. The Revenue has stated that it will operate these arrangements on an administrative basis pending the enactment of the required legislation.

Although this is welcome news for Irish businesses, any question arises as to whether these measures could expose directors to a higher risk of breaching their fiduciary duties further down the line.

Preferential Status in Liquidation

The Revenue enjoys preferential status in liquidation (i.e. it ranks ahead of other creditors for certain tax debts). In other words, if a company becomes insolvent and begins the process of winding up, the Revenue will be paid ahead of any other creditors of that company.

This could prove problematic for company directors, who have duties to their creditors. Does their duties to their creditors mean that they should not avail of the State’s assistance?

Directors Duties

Section 228 of the Companies Act 2014 imposes a non-exhaustive list of fiduciary obligations on company directors. These include the duty to exercise the care, skill and diligence which would be expected of a reasonable person in the same circumstances and to act honestly and responsibly in relation to the conduct of the affairs of the company. However, where a company is insolvent or is threatened with insolvency this fundamental principal changes and directors will also owe a duty to act in good faith and to show the utmost care, skill and diligence to the creditors.

If a company avails of the Revenue’s “warehouse” deferred tax scheme and subsequently becomes insolvent, leading to the Revenue becoming a preferential creditor, it could lead to accusations from other creditors that the company’s directors acted in breach of their fiduciary duties. However, the alternative for company’s directors is not to avail of the Revenue’s “warehousing” measures and this could lead to companies going out of business.

Insolvency

If the situation arises whereby insolvency becomes a likelihood for the company, the focus of the company directors shifts from their members to the company’s creditors.

In the current circumstances, many companies find themselves needing to avail of State assistance. Some commentators have expressed concern that this may be seen as an admission of insolvency and (unless a rescue is possible), the company should cease to trade and begin to wind up the company. On reflection, this could be seen as an overly simplistic view of the legal position and illustrates quite a peculiar situation whereby the Government are, to an extent, encouraging a company to continue trading whilst being technically insolvent. It may be more appropriate that a company (and its directors) who avail of State support, to help preserve the company, should not face repercussions for continuing to trade.

Newspaper articles suggest that the Government is being urged to “dial down” our insolvency regulations here in Ireland, and to follow the temporary changes made in the UK to allow companies to continue trading through the crisis and any financial difficulties through inter alia the suspension of a director’s culpability for any worsening of the financial position of the company or its creditors during the period 1 March 2020 to 30 June 2020. Currently, directors in Ireland have personal liability for debt incurred if they are knowingly carrying on business when a company is insolvent. Any proposed changes would need to consider removing the penalties that apply in the event that a company continues to trade while insolvent if the company is merely trying to “weather the current crisis”.

For instance, the Australian Government has temporarily removed the potential for directors to incur personal liability for continuing to trade whilst insolvent, essentially directors are temporarily freed from risks of incurring personal liability and can focus on job preservation.

It is important to emphasise that the law does not penalise directors who have acted honestly and responsibly at the time the company was in financial difficulty. Professional advice from financial and legal experts ought to be obtained if directors do not believe that there is a likely future for their business or if they have concerns as to their liability in allowing their company continue to trade.

It may be the case that, once a new Government is in place in Ireland, further emergency legislation is passed to modify current insolvency laws so that the sanctions for directors trading while they may not be able to pay all of their debts as they fall due would be suspended for a period, provided that they are acting honestly and responsibly.

The Future Concern

The Central Bank of Ireland has announced that the current outbreak of Covid-19 has “triggered an extremely severe economic shock” which is fundamentally different from anything the economy has encountered previously. In its latest Quarterly Bulletin, the Central Bank outlined the possibility that the economy could shrink by 8.3% of GDP in 2020 and that the unemployment rate may rise to around 25% in the coming months.

It is likely that a number of businesses will be unable to pay outgoings due to severe cash flow shortages in the coming months, if not already in trouble and it is no doubt that the tapering off of the implemented subsidies will have a detrimental effect on many SMEs. In reality, the impact of these emergency schemes may be less advantageous than expected, especially for businesses that have experienced significant financial difficulties or have already shut down. It may be the case that businesses may see costs exceed income for many of the VAT periods covered by this deferral, in which case there is unlikely to be any net VAT payable anyway.

Conclusion

The duties of a company director are not absolute and the nature and scope of their obligations relates to their individual context. These duties extend to any commercial decision or strategic response taken by a company’s board of directors in periods of emergency. Naturally, every decision should be considered in depth and have the possible advantages, disadvantages and alternatives contemplated. Any decisions made by the board may be assisted by expert advice and opinion.

Directors who adopt appropriate corporate governance and good decision making, during the crisis will find themselves and their company in a better position to manage the challenges which lie ahead. Albeit strange, it is probable that the Irish Government will follow the approach that has been taken in both the UK and Australia whereby they encourage many businesses to continue trading whilst being ”balance sheet” insolvent. There is no doubt that the impending economic crisis will heighten the difficulties faced by companies but seeking advice from an expert can bring clarity to decision-making that preserves value.

Kane Tuohy Solicitors have a strong corporate recovery department which has experience acting in high profile liquidations, examinerships and receiverships. Kane Tuohy can provide assistance to your business in developing short-term and long-term strategies in response to this Covid-19 pandemic.

If you are concerned about as to how you can “future-proof” your business, please feel free to contact our office.

 

AUTHORS:

Anna Hollywood, Trainee Solicitor

Ciara Lennon, Trainee Solicitor

 

This Briefing Note is not intended as legal advice. For specific queries, please liaise with your usual contact in Kane Tuohy or with Hugh Kane (hkane@kanetuohy.ie / 087-9726164)

 

 

Covid-19: The Virtual Courtroom Trialed

The outbreak of Covid-19 has resulted in unprecedented levels of disruption to the Courts Service and to   the administration of justice.

In the face of this disruption on the 20th April 2020, for the first time ever, the Courts in Ireland sat with all parties being present in the Court via remote video technology. It is hoped that such virtual courtrooms will add to the various social distancing measures which have been introduced by the Courts Service in response to the Covid-19 pandemic.1

While it has been the Courts Service’s intention to modernise the Courts for some time, including the development of virtual courtrooms over the next decade, the current, Covid-19 pandemic, has accelerated the introduction of virtual courtrooms.2

Addressing the Court by remote video link on 20th April 2020, the Chief Justice commented,

Remote hearings will be suitable for some types of proceedings in the High Court and a limited number of cases in the District and Circuit Courts. The Court Presidents and the Courts Service are exploring ways in which to increase the number of cases which can be dealt with in physical hearings.3

In preparation for this new way of hearing matters, the Courts Service have set up virtual meeting rooms (VMR’s) for the purpose of each Court sitting. They operate via a VMR service which uses a video streaming app called PEXIP. Parties to the proceedings can join a PEXIP VMR session from various streaming services which include Skype, Zoom, Cisco Webex and Teams. The in-Court technology is that which is usually used for video-link to prisons and video conference with remote witnesses.

Following on from the historic events on 20th April 2020, the Court Service released a statement on 8th May 2020 setting out that the Courts will extend the use of virtual remote Court hearings, and organise more physical hearings in the coming weeks.In addition, the Court Service have stated that works have commenced to adapt courtrooms to facilitate physical distancing. The hope that the adaption of the courtrooms coupled with the staggering of Court hearings will allow for a safe environment to increase the number of cases that can be heard in the coming weeks.4

It is not just the Courts Service that is changing the way it operates in the face of the challenges posed by the Covid-19 crisis. Statutory bodies such as the Residential Tenancies Board are utilising video link facilities for the hearing of disputes between landlords and tenants.5

The Workpace Relationship Commission and the Labour Court too are reviewing the way they operate in light of the current pandemic.

The Workpace Relationship Commission – while currently postponing adjudication hearings, face-to-face conciliations and mediations – is still providing mediation of individual complaints by telephone and conciliating collective disputes in like manner. In addition, the WRC is preparing a white paper on the consideration of remote hearing. Meanwhile, the Labour Court has decided that virtual hearings will now be offered to selected cases and has selected a number of cases for hearing in a virtual court-room setting.

Undoubtedly, the Covid-19 pandemic has posed challenges for the Court Service in the administration of justice and for other statutory bodies in carrying out their functions. However, these bodies are reacting and adapting to the issues posed in light of this pandemic.

Kane Tuohy LLP Solicitors remain ready and willing to assist clients with any legal issues they encounter during this difficult time. Should you wish to contact us to discuss any issue you may encounter, please do not hesitate to contact any member of our team.

 

AUTHOR: Ciara Lennon, Trainee Solicitor

 

This Briefing Note is not intended as legal advice. For specific queries, please liaise with your usual contact in Kane Tuohy or with Hugh Kane (hkane@kanetuohy.ie / 087-9726164)

 

 

 

1 https://beta.courts.ie/content/virtual-remote-courts-piloted-ireland-morning

 

2 https://www.dilloneustace.com/legal-updates/covid-19-virtual-courtrooms-to-be-trialed

 

3  https://beta.courts.ie/content/virtual-remote-courts-piloted-ireland-morning

 

4 https://beta.courts.ie/news/gradual-and-careful-planning-creating-pathway-opening-some-courts-courts-statements- friday-may

 

5 https://www.mccannfitzgerald.com/knowledge/disputes/covid-19-litigation-and-dispute-resolution-update