QUERIST: BAMUKA CONSTRUCTION

AGENT: JOHN LAW SOLICITORS, MAIN STREET, BALLYSMITH,

COUNTY WEXFORD.
MATTER: LITIGATION IN RELATION TO SITE IN BALLYCASTLE AND
POSSIBLE RECEIVERSHIP

OPINION

I. INTRODUCTION

1. I am asked to advise in respect of potential liability in respect of proceedings

commenced by a Mr John Murray against querist. These proceedings
concern an accident at a site in Ballycastle village.

2. Agent has requested advice on two discrete issues. First, I am asked to

advise on the implications of the Occupiers Liability Act in respect of
querist’s liability to Mr Murray. Second, agent states that the bank is
threatening to appoint a receiver over the company, and seeks advice on
any effect this may have on litigation.

3. This opinion will address these issues in turn. As a preliminary matter, this
opinion will address the issue of the Statute of Limitations

II. FACTUAL BACKGROUND

4. Querist is a construction company. In 2008 querist was appointed as

contractor by the Department of Education (the “Department”) to build a
secondary school in Ballycastle village. Querist took control of the two-acre
site in January 2009. In March 2009 querist demolished the existing
farmhouse on the site and erected fencing on the perimeter of the lands.
Querist also built a temporary gravel roadway to the site of the proposed
school. Querist has to date invested €178,000 in the site. As a result of
budgetary cut backs no further activity took place on the lands until a
number of weeks ago. Construction is planned to begin on the site in June
2012. During this period a watchman was employed jointly by querist and
the Department.
 5. In December 2009 John Murray, a local council worker, was injured while
he was in the process of delivering git to the construction site. He fell on an
uneven surface near to the place on the lands where the previous property
had been demolished. Mr Murray suffered back injuries and remains on
leave from work as a result. Mr Murray is suing both the Department and
querist on foot of this.

6. Querist is currently in severe financial difficulties and owes €450,000 to

creditors including its bank, which is a debenture holder. The bank has
suggested that it may appoint a receiver.

III. STATUTE OF LIMITATIONS

7. An important preliminary issue that must be addressed is the question of

whether Mr Murray commenced proceedings in a timely fashion. The
Statute of Limitations Act 1957 as amended by the Statute of Limitations
Act 1991 and the Civil Liability and Courts Act 2004 states that proceedings
for personal injuries must be commenced within 2 years of the accrual of
the cause of action.

8. If, however, a claim is brought before the Personal Injuries Assessment

Board (“PIAB”) the period from the date of bringing the complaint until six
months after the date of authorisation under the Act is not counted for the
purposes of limitation.

9. In relation to the incident in question this period elapsed in December 2011.

As such, Mr Murray must have initiated proceedings before that date. If he
has not, and if this is not excused by an application to PIAB, the statute will
be a defence to the proceedings.

IV. SCOPE OF LIABILITY AND THE DEFINITION OF OCCUPIER UNDER

THE OCCUPIERS’ LIABILITY ACT 1995

10. The purpose of the Occupiers’ Liability Act 1995 (the “Act”) is to regulate
liability for dangers that arise due to the state of the premises. This is in
contrast to dangers that arise due to activity performed on the premises.
Applying this qualification to the facts as presented it appears that the
danger that caused Mr Murray his injuries was indeed due to the state of
the premises. He is said to have fallen on an uneven surface near the

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 construction site. As long as there was no activity taking place on the site
at the time that contributed to his injury this appears to fall squarely within
the Act’s scope.

11. The next matter to be established in relation to the Act is the definition of an
occupier. S (1) of the Act defines occupier as follows:

“occupier”, in relation to any premises, means a person exercising

such control over the state of the premises that it is reasonable to
impose upon that person a duty towards an entrant in respect of a
particular danger thereon and, where there is more than one
occupier of the same premises, the extent of the duty of each
occupier towards an entrant depends on the degree of control each
of them has over the state of the premises and the particular danger
thereon and whether, as respects each of them, the entrant
concerned is a visitor, recreational user or trespasser.

12. Jack Lynch, CEO of querist company, expressed surprise that querist was
being sued under the Act while not being the owner of the site. It is clear
from the act that it is control over the site rather than ownership that is the
crucial factor. There is no requirement that an occupier hold any estate in
the land. This was established in the English case of Wheat v Lacon ([1966]
AC 552) and has been approved in the leading Irish authority McMahon and
Binchy, Law of Torts (2nd ed. Butterworths, 2001). Accordingly, an
independent contractor can be an occupier for the purposes of the act.
Despite not owning the property, an independent contractor may have
control of it. Furthermore, the Act clearly allows for there being more than
one occupier. Even if a party has not sufficient control over a property to be
deemed an occupier he may be liable in negligence to an entrant as is
discussed below.

13. Applying the law to the facts, the primary question is what degree of control
querist had over the site. A number of facts suggest that the querist did
exercise substantial control over the site. First, the instructions state that
querist “took control” of the site in January 2009. Querist then demolished
the farmhouse, which presumably involved some considerable presence on
the site and most significantly, fenced the perimeter of the site and built a
road to the proposed site of the school. During the period of vacancy querist
and the Department employed a watchman and split the cost of this. The

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 facts that the site was fenced in and the fact that querist paid for a
watchman, in particular, suggest that querist exercised control over it. The
Act states that one must ask whether the degree of control is such that it is
reasonable to impose upon the occupier a duty in respect of a danger
thereon. On the facts as presented it appears that the control exercised by
querist is sufficiently extensive to make the imposition of such a duty
reasonable.

14. It would be of assistance, however if agent could clarify what degree of

control querists did, in fact, have over the sight. It may transpire that querist
had virtually no control over the site during the vacant period other than
paying the watchman. Furthermore querist may have only carried out the
building of the fence at the request of the Department and had no
independent control of the site. If this is the case it may be that querist falls
outside the definition of occupier. However, on the facts as outlined it
appears that querist exercised enough control to constitute an occupier for
the purposes of the Act.

15. As noted above, there may be more than one occupier of a premises. It is
possible that both querist and the Department are occupiers. The
instructions do not provide sufficiently detailed information as to the
involvement of the Department in the site during the vacant period. The fact
that the Department paid for 50% of the cost of the watchman suggests that
it does exercise some control. The fence may have been erected at the
Department’s request and this would also indicate control. It may be that
paying for the watchman is the only involvement that the Department has
with the site and that while it shoulders some financial burden it may have
no practical control over the site. In that case it may not be an occupier. It
seems most likely, pending further information, that the Department is an
occupier but that it exercises less control over the property than querist.
This will be reflected in their respective standards of care, as discussed
below.

V. THE NATURE OF THE ENTRANT AND THE DUTY OF CARE OWED

16. The Act categorises entrants into three types, replacing the previous
common law position. The categories are: visitor, recreational user and
trespasser and different duties of care are owed to entrants depending on
which of these categories they fall into. A visitor is defined by the act as:

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 i. an entrant, other than a recreational user, who is present on
premises at the invitation, or with the permission, of the
occupier or any other entrant specified in paragraph (a), (b) or
(c) of the definition of “recreational user”,
ii. an entrant, other than a recreational user, who is present on
premises by virtue of an express or implied term in a contract,
and
iii. an entrant as of right,

17. A recreational user is an entrant who with or without the occupier’s

permission or at the occupier’s implied invitation, is present on premises
without a charge (other than a reasonable parking charge) for the purposes
of engaging in a recreational activity. A trespasser is any entrant who is not
a visitor or a recreational user.

18. To visitors, the occupier owes the common duty of care. Thus he owes a
duty to take such care as is reasonable in all the circumstances (having
regard to the care which a visitor may reasonably be expected to take for
his or her own safety and, if the visitor is on the premises in the company of
another person, the extent of the supervision and control the latter person
may reasonably be expected to exercise over the visitor's activities) to
ensure that a visitor to the premises does not suffer injury or damage by
reason of any danger existing thereon. A much lower duty of care is owed
to recreational users and trespassers. The duty owed to them is (a) not to
injure the person or damage the property of the person intentionally, and (b)
not to act with reckless disregard for the person or the property of the
person.

19. Therefore one must establish what kind of entrant Mr Murray was. Mr
Murray was engaged in delivering grit to the site. There is no information as
to on whose instructions he was acting. Given that querist is a construction
company it seems likely that Mr Murray was acting on its request, bringing
him within part (a) above, but clarification is sought on this point.
Alternatively he may have been on the property because he was performing
a contract formed with querist to deliver grit and entry to the premises was
an express or implied term of the contract. If this is the case then Mr Murray
was owed the common duty of care by querist as outlined above.

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 20. Further information is needed as to whether Mr Murray was given
permission to enter the property by the watchman. In such circumstances
the English courts have taken the view that an entrant who enters with the
permission of one who has ostensible authority is to be treated as a visitor
as long as he bona fide believes that he is entitled to be on the premises.
(see Ferguson v Welsh [1987] 1 WLR 1553)

21. The Act states that in the case of joint occupiers the extent of the duty of
each occupier towards an entrant “depends on the degree of control each
of them has over the state of the premises and the particular danger thereon
and whether, as respects each of them, the entrant concerned is a visitor,
recreational user or trespasser.”

22. As such, if Mr Murray was on the site at the express request of the
Department or on foot of a contract with it, but querist was entirely unaware
of this, would Mr Murray be a visitor to querist? Given the situation of shared
control and shared occupation of the site it seems only reasonable that one
occupier would be bound to take into account the interests of those invited
onto the site by the other occupier. This may be subject to a qualification
that the entrant’s presence is not entirely unforeseeable, or entirely
unconnected to one of the occupiers.

23. Mr Murray’s was delivering grit to the site which was probably for the
purposes of construction, and very likely related to the activities of querist,
even if he had been invited onto the site by the Department. Given this
purpose, it seems likely that Mr Murray was a visitor.

24. If querist was a visitor, which is likely, querist owes him a duty to take such
care as is reasonable in all the circumstances (having regard to the care
which a visitor may reasonably be expected to take for his or her own safety
and, if the visitor is on the premises in the company of another person, the
extent of the supervision and control the latter person may reasonably be
expected to exercise over the visitor's activities) to ensure that a visitor to
the premises does not suffer injury or damage by reason of any danger
existing thereon. The duty is limited in querist’s case by the degree of
control that querist exercised over the premises.

25. If Mr Murray had neither the consent of either occupier, nor was acting on
foot of a contract, he may have been a trespasser. Alternatively, if he

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 entered the property as a visitor he may have changed his status by going
beyond the terms of his invitation and doing something that he was not
entitled to do. (see Williams v Wallace [2002] 2 ILRM 62.) There are no
instructions detailing the actions of Mr Murray and the circumstances that
led to the accident. If this is the case querist only owed Mr Murray a duty
not to injure him intentionally and not to act with reckless disregard for him.
As above, this duty is shaped by reference to the degree of control
exercised by querist over the site. There is no suggestion in my instructions
that Mr Murray was engaging in any activity that might render him a
recreational user.

VI. BREACH OF THE DUTY OF CARE

26. If Mr Murray was a visitor, querist owed him a duty to take such care as is
reasonable in all the circumstances to ensure that a visitor to the premises
does not suffer injury or damage by reason of any danger existing thereon,
and the reasonableness of querist’s actions is judged by reference to the
degree of control exercised by querist over the property. Did querist breach
that duty? It should be noted that a thorough evaluation of this question
turns on further information as to the degree of control exercised by querist
and this assessment is subject to that proviso.

27. Querist’s primary action or omission was that a surface near to the
construction site was in an uneven condition, and this surface is claimed to
have caused Mr Murray to fall. It is relevant whether querist caused the
surface to be uneven, or whether this was caused by another party and
querist did not remedy it. If querist caused the hazard and did not act to
protect visitors from it this would suggest a breach of the duty of care. Even
if the hazard was not caused by querist, querist may be held to have
breached the duty of care by failing to repair the surface or take sufficient
steps to warn visitors about it.

28. Querist appears not to have had a warning sign in place, and it may be that
a warning sign would have prevented Mr Murray from being injured. The
courts have long accepted the importance of warnings signs, see
O’Donoghue v Greene [1967] IR 40. Querist did employ a watchman,
however, and had fenced in the area and these actions could be taken as
evidence of fulfilment of the duty of care.

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 29. An important question is whether the hazard was patent to any user of the
site. If so, then Mr Murray would be expected to protect himself from injury,
the duty to visitors in Part 3 of the Act states that an occupier is entitled to
take account of what care a person can be expected to take of their own
safety.

30. Querist’s failure to clear the hazard or warn entrants of its existence is only
culpable if querist has enough control over the site that it could reasonably
have been expected to take those steps. On the facts it appears that querist
did have this level of control, but as above this is subject to correction in the
light of further facts.

31. Assuming that querist had a substantial level of control over the site it
seems likely that it breached its duty of care to Mr Murray by creating the
hazard, if it created it, failing to remove the hazard and failing to take steps
to warn entrants about it.

32. If Mr Murray was a trespasser he is only owed the very low standard of not
to intentionally harm or act with reckless disregard. Whatever degree of
control querist exercised it is very unlikely to be considered to have
breached this duty, on the information provided.

VII. LIABILITY OF THE DEPARTMENT

33. As set out above, the Department may be an occupier for the purposes of
the Act, but seems to have less control than querist. As such, its duty of
care to Mr Murray is, pending more information, likely to be more limited.
The same issues apply as discussed above in relation to whether Mr Murray
was a visitor to one occupier but not to the other. This point will not be
revisited here as the same considerations apply.

34. If Mr Murray is a visitor he is owed the common duty of care, limited by the
degree of control exercised by the Department. Assessment of this will turn
on whether the Department had anything to do with creating the uneven
surface, knew of its existence, or could have taken steps to correct it or warn
about it. No information is available on any of these matters, but it is possible
that the Department breached the duty of care imposed upon it by the Act.
If Mr Murray was a trespasser it is very unlikely that the Department would
be found to have breached its very limited duty of care to him.

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 35. Part 7 of the Act states:

An occupier of premises shall not be liable to an entrant for injury or

damage caused to the entrant or property of the entrant by reason of
a danger existing on the premises due to the negligence of an
independent contractor employed by the occupier if the occupier has
taken all reasonable care in the circumstances (including such steps
as the occupier ought reasonably to have taken to satisfy himself or
herself that the independent contractor was competent to do the work
concerned) unless the occupier has or ought to have had knowledge
of the fact that the work was not properly done.

36. This provision would appear to take precedence over the general rule in
relation to liability of joint occupiers. Even if the Department could be said
to have some control, this provision absolves it from liability if the negligence
is found to be solely that of querist, so long as the Department took
reasonable care, including ensuring the competence of querist, as long as
it did not know and could not reasonably be expected to know that work was
not properly done.

37. There is no suggestion that the Department failed to ensure the competence
of querist. The other parts of the test revisit questions about the level of
involvement the Department had with the site and its knowledge of its state.
If the Department had no knowledge of the state of the premises having left
it entirely in the control of querist it may be covered by this section. The
Department’s contribution towards the costs of the watchman might
undermine this, as it shows some involvement with the site and the
watchman might be expected to report back to the Department as to its
state.

VIII. ASSESSMENT OF DAMAGES

38. Whether Mr Murray seeks recovery under the Act or in negligence his
recovery will be limited to damages for injury that was reasonably
foreseeable from the actions or omissions of querist. For this reason it is
necessary that an up to date medical report for Mr Murray is obtained.

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 39. It may be that both querist and the Department are liable to Mr Murray. If
this is the case they will be treated as concurrent wrongdoers. The Civil
Liability Act 1961 governs the law on concurrent wrongdoers and defines a
concurrent wrongdoer situation in Section 11(1) as occurring when two or
more persons are wrong persons and are responsible to a third person for
the same damage, whether or not judgment has been recovered against
some or all of them. Each wrongdoer is liable for the whole of the damage
in respect of which he is a concurrent wrongdoer.

40. Applying this to the facts, Mr Murray may be able to recover the whole of
the damage from either querist or the Department.

XI. RECEIVERSHIP

41. Querist also seeks advice in relation to the fact that querist’s bank, a
debenture holder, has threatened to appoint a receiver to the company. It
appears from instructions that querist desires advice as to the appointment
of a receiver and specifically as to the effect of the appointment of a receiver
on the above litigation.

42. A debenture is an instrument by which a company acknowledges its

indebtedness and which is secured by a charge on the company’s assets
and /or undertaking. The charge can be either a fixed charge over a
particular asset or a floating charge over the company’s assets and
undertakings, or a portion of them, which is not attached to any specific
asset. The appointment of a receiver is a remedy for a debenture-holder
through which the debenture-holder can enforce his security. The receiver’s
purpose is to receive or get in the assets of the company and dispose of
them to pay off the principal and interest due to the debenture-holder.

43. The receiver is either appointed by the debenture-holder if the debenture

allows for this, or by the court if it does not. In practice, most debentures
allow for the appointment of a receiver if certain events or acts of default
occur. Where there is no power to appoint a receiver in the debenture the
receiver may be appointed by the court, though this is usually only permitted
when the debenture-holder’s security is in jeopardy.

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 44. A court-appointed receiver is an officer of the court and his powers are more
limited than the powers of a receiver appointed on foot of a clause in a
debenture, though both kinds of receiver have a fiduciary duty to the
debenture-holder and have a duty to the debenture-holder to take
reasonable care in the conduct of the receivership. A court appointed
receiver’s powers depend on the terms of the order of court by which he
was appointed. The powers of a receiver appointed by a debenture-holder
are governed by the terms of the debenture itself.

45. On the appointment of a receiver the powers of the company and the
directors’ authority are suspended in relation to the assets affected by the
receivership and those powers can only be exercised with the consent of
the receiver. A receiver may be appointed as a simple receiver or as a
receiver manager. A simple receiver only has power to deal with the specific
assets over which the charge was held, while a receiver manager has the
power to carry on the business of the company. Whether the receiver is a
simple receiver or receiver manager depends on the nature of the charge
that led to his appointment. If the receiver is appointed on foot of a charge
over a specific asset or series of assets the appropriate appointment is a
simple receiver. Where the debenture created charges over the entire
undertaking and business of the company the debenture-holder may
appoint a receiver manager. (See Irish Oil and Cake Mills Ltd 27 March
1983, unreported, HC, Costello J)
46. A debenture created on foot of a fixed charge leads to the appointment of a
simple receiver, as the receiver deals only with a specific asset belonging
to the company. A receiver appointed on foot of a floating charge over the
entire undertaking and business of the company would be a receiver
manager. A receiver appointed on foot of a floating charge over a specified
class of assets would be a simple receiver. Furthermore, on the
appointment of a receiver any floating charges crystallise and become fixed
charges on the assets or undertaking over which they were created.

47. The powers of a receiver include the power to take possession of charged
assets, the power to collect, receive and get in the charged assets and the
power to sell the charged assets. Receiver managers often have express
powers than include the power to compromise the debts of the company,
the power to carry on the business of the company, the power to insure and
repair property, the power to borrow money for the business and the power
to dismiss and employ employees. All receivers also have ancillary powers

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 which are incidental to or consequential upon the exercise of their express
powers. The appointment of a receiver does not terminate the powers of the
company’s directors, it only serves to suspend their powers to the extent
that they are superseded by the powers of the receiver.

48. Applying this to querist’s situation, very little can be said about the powers
of the threatened receiver without further information as to the debenture.
The receiver can be appointed if specified in the debenture and if the
required act or event of default has taken place. If no provision is made for
this in the debenture then a receiver may be appointed by court. If the
debenture created a fixed charge or a floating charge over a specified class
of assets the receiver will be a simple receiver. If the debenture created a
floating charge over the assets and undertakings of the company then the
receiver will be a receiver manager and will take over the business of the
company. A point of relevance to Mr Lynch is that while contracts of
employment between company and its employees are not necessarily
terminated on the appointment of a receiver, some contracts which are
inconsistent with receivership will be terminated, such as the contract of
employment of a managing director on the appointment of a receiver
manager.

X. RECEIVERSHIP AND OCCUPIERS’ LIABILITY LITIGATION

49. Querist specifically requires advice as to the effect of the appointment of a

receiver on the litigation discussed above. The primary issue in relation to
this is who will be the proper party to defend the litigation if a receiver is
appointed, querist or the receiver. If the receiver is a court appointed
receiver the general rule is that he should not defend proceedings without
the leave of the court. (see Bristowe v Needham (1847) 2 Ph 190) If the
receiver is a simple receiver then his appointment should have no effect on
the defence of the proceedings. His only dealing with the company will be
in relation to the specific assets charged.

50. Where the receiver is a receiver manager appointed by the debenture-

holder his powers are dictated by the terms of the debenture and this should
be inspected closely to see whether the power to defend proceedings is
included. There is no statutory power for receivers to defend proceedings,
but it may be that there is an implied power to do so. It was established M
Wheeler v Warren [1928] Ch 840 that an implied power of a receiver is the

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 power of the receiver to sue in the company’s name. A natural corollary of
this is that the receiver would be entitled to defend proceedings taken
against the company.

51. Querist may also be able to defend the proceedings. As noted above, the
appointment of a receiver only suspends the powers of the company in
relation to the assets affected by the receivership. Even when a receiver
manager is appointed, the structure of the company still exists. In
Lanscomme Ltd v United Dominions Trust (Ireland) Ltd and James Gilligan
[1994] 1 ILRM 227 the court found that company directors’ powers to
maintain proceedings commenced by a debenture holder were unaffected
by the subsequent appointment of a receiver by the debenture holder. The
court stated, however, that the directors were not entitled to interfere with
the receiver’s dealings with the company property that was subject to the
debenture, or otherwise imperil the company’s assets that were the subject
of the debenture. This principle would appear to apply equally to querist’s
entitlement to defend proceedings. As long as it did not interfere with the
process of receivership, the defence could proceed without the consent of
the receiver.

52. Finally, there is an issue as to whether the receivership will affect recovery
by Mr Murray in the event that he is successful in his claim against querist.
A receiver who receives assets that are the subject of a fixed charge has
no obligation other than to apply the proceeds of these in discharge of the
amount owed to the debenture holder. By contrast, where a receiver is
receiving the proceeds realised in discharge of debts owed under a floating
charge he must first pay the company’s preferential creditors before paying
the debenture holder. Mr Murray’s judgment, should he secure it, will not
render him a preferential creditor. He would only be paid once the
receivership had concluded. One significant impact of the receivership on
the litigation is that it may cause Mr Murray to discontinue it if he concludes
that querist would not be in a position to pay any damages he might be
awarded, given the precarious financial position of querist. He may choose
to pursue his claim against the Department alone.

XI. SUMMARY OF ADVICE

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 53. It is not possible to give full advice as to the liability of querist under the
Occupiers’ Liability Act 1995 without further detail on the facts. All that can
be advised is that on the facts provided, it would appear that querist is likely
to be considered an occupier for the purposes of the Act. Given that Mr
Murray was on the premises delivering grit which was very likely to have
been used in the construction works, he is likely to be classed as a visitor
for the purposes of the act and was as such owed the common duty of care
by querist. Pending further information as to the occurrence of the accident,
querist may be found to have breached its duty of care to him and is advised
that liability under the Occupiers’ Liability Act 1995 is a strong possibility.

54. With regard to the receivership issue, it is similarly impossible to give

comprehensive advice. Querist is advised to consult the debenture to
ascertain the parameters of the potential receivership. A receiver may be
appointed if this is provided for in the debenture if the specified acts of
default have taken place. If this is not provided for in the debenture a
receiver may be appointed by the court. Depending on the terms of the
debenture the receiver may be a simple receiver with powers only over the
charged asset, or a receiver manager with powers to run the business of
the company. The effect of the receivership on the threatened litigation will
be minimal and it is likely that the receiver and querist will both be entitled
to defend the proceedings being brought by Mr Murray. Mr Murray may take
the view that because of querist’s financial difficulties he should pursue his
claim against the Department alone.

55. Nothing further occurs.

A. BARRISTER BL

1 June 2012

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