Month: February 2011

In Watters v Independent Star [2010] IECC 1 (03 November 2010), the first reported judgment on the Defamation Act, 2009 (also here), Matthews J granted the plaintiff a declaratory order pursuant to section 28 of the Act (also here) that an article published by the defendant was defamatory, and he made a further order pursuant to section 33 of the Act (also here) prohibiting the newspaper from re-publishing the defamation.

In an earlier post (also here), I have already looked at some issues arising from this decision. Another critical aspect of Matthew J’s judgment was that, although the plaintiff was a convicted criminal, he nevertheless possessed a residual reputation which was damaged by the newspaper’s allegations. Of course, evidence of a plaintiff’s general bad reputation is admissible in evidence in mitigation of damages (see section 31(4)(g) and section 31(6)(a) of the Act (also here); see also Hill v Cork Examiner Publications [2001] 4 IR 219, [2001] IESC 95 (14 November 2001) and the recent decision of Tugendhat J in Hunt v Evening Standard [2011] EWHC 272 (QB) (18 February 2011)). However, this is a long way from saying that such a general bad reputation renders a plaintiff libel-proof. Moreover, the plaintiff in Watters did not seek damages, but rather sought and obtained a declaratory order and an injunction.

Section 33 of the 2009 Act allows the court to make interim, interlocutory or permanent orders prohibiting the publication or further publication of the defamatory statement in respect of which the application was made, and it was on foot of that section that Matthews J granted a permanent injunction restraining re-publication of the defamation. In my earlier post, I considered its applicability in the context of interim and interlocutory applications; and I argued that, in much the same way as the previous common law had been, section 33 had to be interpreted in the light of the protections of freedom of expression by the Constitution and the European Convention on Human Rights. In particular, since such a temporary injunction constitutes a prior restraint upon speech, applications for interim or interlocutory injunctions in defamation cases must be scrutinised with particular care.

In principle, such considerations derived from the Constitution and the Convention should also be in play when – as in Watters – an application is made under section 33 for a permanent injunction as a remedy for defamation. In the US, it has been argued that a permanent injunction imposed after trial nevertheless amounts to a prior restraint upon any subsequent speech. However, the courts have held that injunctions against certain statements based on a finding on the merits that those particular statements are defamatory effectively do not amount to prior restraints and are therefore not presumptively unconstitutional (see Balboa Island Village Inn v Lemen 156 P 3d 339 (Supreme Court of California, 2007); St James Healthcare v Cole 2008 MT 453 (Supreme Court of Montana, 2008); Hill v Petrotech Resources Corp (Supreme Court of Kentucky, 21 October 2010) (blogged here on the Volokh Conspiracy)). These cases demonstrate the confusing doctrinal consequences of the US rule against prior restraints. A final order prohibiting future publication is indeed a prior restraint upon that future speech; it would be better if the US cases accepted that rather than denying it; but they would then have to go on and hold that the full trial establishing the defamatory nature of the publication overcomes the presumption against prior restraint.

By contrast, the approach to prior restraints in Ireland, influenced by the Convention, is much more nuanced, and it does not run into the same doctrinal problems justifying a section 33 permanent injunction as a remedy after trial in defamation cases. Even if a permanent injunction does indeed constitute a prior restraint upon future speech, and thus a restriction upon the right to freedom of expression protected by the Constitution and the Convention, the question would not be whether the constitutional presumption against prior restraint has been overcome, but whether, after a close and penetrating examination of the facts, the permanent injunction is a necessary and proportionate restriction upon that right. In the circumstances of Watters v Independent Star, this test would almost certainly have been satisfied, but it may nevertheless be worth a future defendant’s while taking the point. However, given the recent demise of the Star on Sunday, it won’t be that defendant.

• Carey v Independent Newspapers (Ireland) Ltd [2003] IEHC 67 (7 August 2003)
• Mallett & Son (Antiques) Ltd v Rogers [2005] 2 ILRM 471, [2005] IEHC 131 (12 May 2005)
• ESL Consulting Ltd trading as VoIP Ireland v Verizon (Ireland) Ltd [2008] IEHC 369 (27 November 2008)  
• Moloney v Fox [2010] IEHC 72 (22 February 2010).

During the property boom, lots of banks made lots of loans to lots of property developers. Then, as the market began to tighten, many of the banks made alternative arrangements with some of their developer clients. Now that the property market has collapsed, banks are seeking to enforce the terms of loans as against developers, and the developers are relying on the alternative arrangements by way of defence. An Cumann Peile Boitheimeach Teorenta v Albion Properties Ltd & Ors [2008] IEHC 447 (07 November 2008) is one such case (see also the legal issues in Helsingor Ltd v Walsh [2010] IEHC 54 (05 March 2010)).

I learn via the very helpful new blog Stare Decisis Hibernia – a blog concerned with recent decisions of the Irish Superior Courts – that another such case has recently been decided by the High Court. ACC Bank plc v Kelly [2011] IEHC 7 (10 January 2011) turned largely on its facts, and Clarke J held that there was no binding agreement in place or clear understanding between the parties that the bank would not call in the loan. The defendants had argued that the alternative arrangement could be relied upon on the basis of an estoppel or enforced as a contract supported by consideration, but, in the course of holding that those claims failed on the facts, Clarke J made some important observations about when forbearance to sue constitutes good consideration (the underlined words are his emphasis):

7.9 So far as the case in promissory estoppel is concerned, I have already indicated that I am not satisfied that any concluded arrangement (even if it be short of a contract) had been come to between the parties such as could have grounded a case in promissory estoppel. The factual basis for promissory estoppel does not, therefore, arise.

7.10 Likewise, as I am satisfied that no agreement was reached, the question as to whether any agreement might not have amounted to a contract by virtue of the absence of consideration does not arise. However, I should note that I agree with the submissions made by counsel for ACC that an agreement, whereby the only thing being agreed to on one side is a forbearance to exercise its legal rights without obtaining anything else in return, cannot amount to a contract, although such an arrangement might give rise to a promissory estoppel if the other factual requirements for a promissory estoppel were found to exist. A number of cases (Cooke v Wright (1861) 1 B&S 559, Re Montgomery, a Bankrupt (1876) IR 10 Eq 479, and Fullerton v Provincial Bank of Ireland [1903] AC 309) were referred to by the Kellys in the course of argument as authority for the proposition that forbearance can amount to consideration. That is, of course, the case. However, forbearance is consideration given by the person forbearing, it is not consideration given to that person. In other words, where someone agrees to forebear in return for getting something else, then a binding contract exists, so that if the person does forebear they can insist on getting their side of the bargain and have whatever was promised (for example, extra security) delivered. However, none of those cases are authority for the proposition that someone who gives nothing can enforce a forbearance agreed by the other side.

7.11 For all of those reasons, I am satisfied at the level of principle that ACC was entitled to call in the full principal sum …

This is a clear and straightforward holding that the essence of the doctrine of consideration is an exchange of something for something. If I give something to you, I have effectively paid for your promise to give something to me and can therefore enforce it. But if I have given nothing to you, I have not given anything in exchange for a promise from you to give something to me; your promise is gratuitous, unsupported by consideration, and thus unenforceable. According to Dire Straits, in rock’n’roll, you might get money for nothing, but not according to the doctrine of consideration. The bank had not forborne anything, but if they had, then they would have given good consideration for any reciprocal promise made by the plaintiff; conversely, on the facts, the plaintiff had not given the bank anything, and thus had given no consideration any promise to forbear made by the bank. The classic treatment of forbearance as consideration is Samuel Stoljar “The Consideration of Forbearance” (1965-1967) 5 Melb U L Rev 3; see also Melvin Aron Eisenberg “The Principles of Consideration” 67 Cornell L Rev 640 (1981-82); and it continues to appear with regularity in the case-law (see, eg, Haines v Hill [2008] 2 All ER 901, [2007] EWCA Civ 1284 (05 December 2007), Robinson v Lane [2010] EWCA Civ 384 (03 March 2010); update: see also Mackin v Mc Cann [2011] IEHC 30 (21 January 2011)); but, in the end, it is not a difficult legal issue, even if cases like ACC v Kelly demonstrate that establishing it on the facts can be quite a complicated matter. I expect to see many more of these cases as disputes between banks and developers reach the courts.

Thanks, Stare Decisis Hibernia for bringing this interesting case to my attention. But one minor grumble: could you please put a deep link to the case itself into your note on it? It was a tiny bit annoying having to check BAILII and Courts.ie for it.