Law and Ethics. Northern Ireland (NI) Course Text. Professional, Practical, Proven.

Law and Ethics Northern Ireland (NI) Course Text Professional, Practical, Proven www.accountingtechniciansireland.ie 117575 Law NI Manual 2018 - Manual.indb 1 30/08/2018 14:41

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Table of Contents FOREWORD...xi SYLLABUS: LAW AND ETHICS (NI)...xvii TABLE OF LEGISLATION...xxv CHAPTER 1: THE NORTHERN IRELAND LEGAL SYSTEM...1 1.1 THE BRITISH CONSTITUTION...2 1.1.1 The Organs Of State...2 1.2 DEFINITION AND DIVISIONS OF LAW...3 1.2.1 Divisions of Law...3 1.2.2 Civil law v Criminal law...4 1.2.3 Criminal and civil cases in practice...4 1.3 STRUCTURE AND JURISDICTION OF THE COURTS...5 1.3.1 The criminal court structure... 5 1.3.2 The civil court structure...8 1.4 SOURCES OF NORTHERN IRELAND S LAW...10 1.4.1 Legislation... 11 1.4.2 Case law and precedent...12 1.5 EUROPEAN LAW...14 1.5.1 European Legislation...14 1.5.2 Institutions of The European Union...17 iii 117575 Law NI Manual 2018 - Manual.indb 3 30/08/2018 14:41

Table of Contents Law and Ethics (NI) CHAPTER 2: THE LAW OF CONTRACT... 21 2.1 DEFINITION OF A CONTRACT...22 2.1.1 Types of contracts...22 2.1.2 Essential elements of a contract...23 2.2 AGREEMENT: OFFER AND ACCEPTANCE...23 2.2.1 Definition of an Offer...23 2.2.2 Distinguishing offers from Invitations to treat...23 2.2.3 Rules of Acceptance...25 2.2.4 Termination of an Offer...27 2.3 INTENTION TO CREATE LEGAL RELATIONS...29 2.4 CONTRACTUAL CAPACITY...31 2.4.1 Contractual capacity of a company...33 2.5 CONSIDERATION...33 2.5.1 Rules of consideration...33 2.6 CONTENTS OF A CONTRACT...35 2.6.1 Conditions and warranties...36 2.6.2 Innominate Terms (sometimes referred to as intermediate terms)...37 2.7 EXEMPTION CLAUSES (EXCLUSION AND LIMITATION CLAUSES)...38 2.7.1 Incorporation of Exemption Clauses...38 2.7.2 Legislation...39 2.7.3 Construction of Exemption Clauses...41 CHAPTER 3: DISCHARGE OF CONTRACT...45 3.1 METHODS OF DISCHARGE... 46 3.1.1 Performance...46 3.1.2 Agreement...46 3.1.3 Notice...47 3.1.4 Breach of Contract...47 3.1.5 Operation of the Law...47 3.1.6 Frustration...47 3.2 REMEDIES... 50 3.2.1 Common Law Remedies... 50 3.2.2 Equitable Remedies...52 CHAPTER 4: EMPLOYMENT LAW...57 4.1 INTRODUCTION TO EMPLOYMENT LAW...58 4.1.1 Distinction between an Employee and an Independant Contractor...58 4.1.2 The Four Tests...59 4.2 TERMINATION OF AN EMPLOYMENT CONTRACT...63 4.2.1 Dismissal...63 4.2.2 Eligibility to claim...64 4.2.3 Duty to follow Code of Practice on disciplinary and grievance procedures...69 iv 117575 Law NI Manual 2018 - Manual.indb 4 30/08/2018 14:41

Law and Ethics (NI) Table of Contents 4.2.4 Remedies for Unfair Dismissal (ss. 146-159 of the Order)...71 4.2.5 Constructive Dismissal...72 4.2.6 Wrongful Dismissal...73 4.2.7 Eligibility Criteria...74 4.3 REDUNDANCY...75 4.3.1 Employee s rights on redundancy...76 4.3.2 Procedure of Good Industrial Practice...77 4.3.3 The right to claim unfair dismissal in redundancy cases...79 4.3.4 The tribunal process for redundancy...79 CHAPTER 5: AGENCY LAW...83 5.1 INTRODUCTION TO AGENCY LAW...84 5.1.1 Consent and Authority...84 5.1.2 Classifications of an Agent...84 5.2 CREATION OF AN AGENCY...84 5.3 DUTIES AND RIGHTS OF AN AGENT...88 5.3.1 Duties owed to the principal...88 5.3.2 Rights of an agent...89 5.4 LIABILITY OF AN AGENT TO THIRD PARTY...89 5.4.1 Contracting within authority...89 5.4.2 Contracting outside authority...89 5.5 TERMINATION OF AN AGENCY... 89 CHAPTER 6: CONSUMER LAW...93 6.1 IMPLIED TERMS IN CONSUMER CONTRACTS...94 6.2 CONSUMER RIGHTS ACT 2015... 94 6.2.1 Implied Terms...95 6.2.2 Digital Content and the 2015 Act...97 6.3 CONTRACTS FOR THE SUPPLY OF SERVICES...98 6.3.1 Implied terms...98 6.4 REMEDIES... 99 6.5 THE CONSUMER PROTECTION (NORTHERN IRELAND) ORDER 1987...99 6.6 CONSUMER PROTECTION FROM UNFAIR TRADING REGULATIONS 2008...100 6.6.1 Unfair commercial practices...100 6.6.2 Misleading practices...101 6.6.3 Aggressive practices...103 6.6.4 Prohibited practices...103 6.6.5 Enforcement of the Regulations...104 v 117575 Law NI Manual 2018 - Manual.indb 5 30/08/2018 14:41

Table of Contents Law and Ethics (NI) CHAPTER 7: LAW OF TORT...109 7.1 DEFINITION OF TORT... 110 7.2 NEGLIGENCE...110 7.2.1 Duty of Care... 110 7.2.2 Breach of Duty... 112 7.2.3 Causation... 114 7.2.4 Remoteness... 114 7.3 DEFENCES IN TORT... 115 7.4 REMEDIES IN TORT... 117 7.5 PROFESSIONAL DUTY OF CARE...119 CHAPTER 8: BUSINESS ORGANISATIONS...123 8.1 SOLE TRADER...124 8.2 A BUSINESS PARTNERSHIP...125 8.3 COMPANIES AND LIMITED LIABILITY...126 8.3.1 Limited Liability...126 8.3.2 Public and Private Companies...127 8.3.3 Corporate personality...129 CHAPTER 9: LAW OF PARTNERSHIPS...133 9.1 TYPES OF PARTNERSHIP...134 9.2 DEFINITION OF A PARTNERSHIP...134 9.3 THE PARTNERSHIP AGREEMENT...135 9.4 RIGHTS AND DUTES OF A PARTNERSHIP...136 9.4.1 Duties of Partners...136 9.4.2 Rights of Partners...136 9.4.3 Authority and Liability of a Partner...137 9.4.4 Liability of Partners in Contract and Tort...138 9.5 DISSOLUTION OF A PARTNERSHIP...139 9.5.1 Debts/losses on dissolution...139 9.5.2 Limited Liability Partnership...140 CHAPTER 10: COMPANY FORMATION...145 10.1 TYPES OF COMPANIES...146 10.2 REGISTRATION OF A COMPANY...147 10.2.1 Companies Registry...147 10.2.2 Certificate of Incorporation (Section 15 CA 2006)...149 10.2.3 Trading Certificate (section 761 CA 2006)...149 10.2.4 Companies off the shelf...149 10.2.5 Re-registration of a company...150 vi 117575 Law NI Manual 2018 - Manual.indb 6 30/08/2018 14:41

Law and Ethics (NI) Table of Contents 10.3 THE CONSTITUTION OF A COMPANY...150 10.3.1 Articles of Association...151 10.3.2 Contents of Articles...151 10.3.3 Alteration of an Article...151 10.4 COMPANY NAMES... 152 10.4.1 Prohibited names...152 10.4.2 Right to change a company name...153 10.4.3 Publication of a company name...153 CHAPTER 11: COMPANY FINANCE...157 11.1 INTRODUTION TO SHARE CAPITAL...158 11.1.1 Definition of a share...158 11.2 TYPES OF SHARES... 158 11.2.1 Ordinary Shares...158 11.2.2 Preference shareholders...159 11.2.3 Dividends...160 11.3 SHARE CAPITAL... 160 11.3.1 Rules to maintain share capital...162 11.4 LOAN CAPTIAL... 164 11.5 DEBENTURES... 164 11.6 FIXED AND FLOATING CHARGES...166 11.6.1 Crystallisation of a Floating Charge...167 11.6.2 Priority of charges...168 11.6.3 Registration of Charges...169 CHAPTER 12: COMPANY DIRECTORS...173 12.1 INTRODUCTION TO DIRECTORS...174 12.1.1 Types of directors...174 12.1.2 The authority of directors...175 12.1.3 Appointment of a director...176 12.1.4 Age limit...176 12.1.5 Removal from office...176 12.2 DUTIES OWED BY A DIRECTOR TO A COMPANY...179 12.2.1 Fiduciary Duties...179 12.2.2 Additional duties of directors...181 CHAPTER 13: AUDITORS AND COMPANY ACCOUNTS... 185 13.1 INTRODUCTION TO AUDITORS...186 13.1.1 Appointment of an Auditor...187 13.1.2 Companies exempt from an audit...187 vii 117575 Law NI Manual 2018 - Manual.indb 7 30/08/2018 14:41

Table of Contents Law and Ethics (NI) 13.2 DUTIES AND RIGHTS OF AUDITORS...188 13.2.1 Duty to provide a Report... 188 13.2.2 Criminal Offences for auditors...188 13.2.3 Rights of Auditors...189 13.2.4 Liability of Auditors...189 13.3 REMOVAL AND RESIGNATION OF AUDITORS...190 13.3.1 Removal from office...190 13.3.2 Resignation from office... 190 13.4 COMPANY ACCOUNTS... 190 13.4.1 Accounting Reference Dates...191 13.4.2 Accounting Records...191 13.4.3 Annual Accounts...192 13.4.4 Directors Report...192 13.4.5 Annual Return...193 13.4.6 Company Secretary...193 CHAPTER 14: COMPANY MEETINGS... 197 14.1 ANNUAL GENERAL MEETING AND GENERAL MEETING...198 14.2 RESOLUTIONS...199 14.2.1 Written Resolutions...200 14.2.2 Voting at Company Meetings...200 14.3 PROCEDURE AT COMPANY MEETINGS...202 CHAPTER 15: COMPANY CONCLUSION...205 15.1 ADMINISTRATION...206 15.1.1 Appointment of an Administrator...206 15.1.2 The role of an Administrator...206 15.1.3 Powers and duties of an Administrator...207 15.1.4 Removal of an Administrator...207 15.1.5 The advantages of administration...207 15.2 LIQUIDATION...208 15.2.1 Compulsory Liquidation...208 15.2.2 Voluntary Liquidation...209 15.2.3 Members voluntary winding up...210 15.2.4 Creditors voluntary winding up...210 15.2.5 Company Voluntary Arrangement... 211 15.3 THE LIQUIDATOR...213 15.3.1 The powers/duties of the liquidator...213 15.3.2 The rules governing the priority of debts...213 15.3.3 The termination of the liquidator s appointment...214 viii 117575 Law NI Manual 2018 - Manual.indb 8 30/08/2018 14:41

Law and Ethics (NI) Table of Contents CHAPTER 16: DATA PROTECTION...217 16.1 INTRODUCTION TO DATA PROTECTION...218 16.2 DEFINITION OF DATA... 218 16.3 DEFINITION OF A DATA SUBJECT...219 16.4 DEFINITION OF A DATA CONTROLLER AND DATA PROCESSOR...219 16.4.1 Registration with the Office of the Information Commissioner s Office...220 16.5 THE SIX LAWFUL BASES... 220 16.6 PRINCIPLES OF DATA PROCESSING...220 16.7 THE EIGHT GENERAL PRINCIPLES OF THE DPA, 1998...222 16.8 CONSENT TO PROCESSING...225 16.9 OBLIGATIONS IMPOSED UPON DATA CONTROLLERS...226 16.9.1 Data Protection Officers...226 16.9.2 Data Controllers and Data Protection Impact Assessments (DPIA)...227 16.9.3 Obligations Imposed Upon Data Processors...228 16.10 RIGHTS OF A DATA SUBJECT...228 16.10.1 Right to Information...229 16.10.2 Right to Establish whether Personal Data is being held...229 16.10.3 Right of Access...229 16.10.4 Right to have Personal Data Corrected or Erased, where appropriate...231 16.10.5 Right to Restriction of Processing...232 16.10.6 Right to Data Portability...232 16.10.7 Right to Object to Disclosure of Data to Third Parties...233 16.11 THE ROLE OF THE INFORMATION COMMISSIONER S OFFICE...233 16.11.1 Information Commissioner s Enforcement Powers...233 16.11.2 Notification of Data Breaches...235 CHAPTER 17: CORPORATE OFFENCES AND CORPORATE GOVERNANCE...243 17.1 COMPANY LAW OFFENCES...244 17.1.1 Fraudulent and Wrongful Trading...244 17.1.2 Money Laundering...246 17.1.3 Insider Dealing...249 17.2 CORPORATE GOVERNANCE...251 17.2.1 The Sources of Corporate Governance...251 17.3 CORPORATE SOCIAL RESPONSIBILITY...254 INDEX...259 ix 117575 Law NI Manual 2018 - Manual.indb 9 30/08/2018 14:41

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FOREWORD Foreword This text has been developed by Accounting Technicians Ireland for use by students participating in our programme of study and preparing for our examinations based on the syllabus published for the Academic Year 2018-2019. While every effort is made to ensure that the information outlined in this text is accurate, Accounting Technicians Ireland cannot accept the responsibility for lack of, or perceived lack of, information contained herein. The text is intended to be a sufficiently detailed synopsis of the current syllabus material (and knowledge level required thereof) in relation to this module. Students should take particular note of the weighting attached to this module, as clearly outlined in the syllabus. It is on the basis of this weighting that students should prepare their own timetable for study. This text also includes questions related to the topics for this module. These questions are part of a larger database of questions that students (and also lecturers) can access online for this subject. These questions (and suggested solutions) are available through your TouchPoint portal in the MyRevision area. We recommend that students refer to MyRevision having completed each chapter or a section of this module. This resource allows students to study and revise online through self-test questions. Exam standard questions are also available here. We also recommend students refer to the past exam papers for this module. These papers are published on our website (www.accountingtechniciansireland.ie) along with suggested solutions and comments from the Examiner. Attempting these under exam conditions will help students to prepare for the examination and plan their study time appropriately. xi 117575 Law NI Manual 2018 - Manual.indb 11 30/08/2018 14:41

Copyright This text is issued by Accounting Technicians Ireland to students taking its examinations. It may not be used in whole, or in part, for any course of study and/or examination of any other body whatsoever without prior permission in writing from Accounting Technicians Ireland. This publication, or any part thereof, may not be made available in any library, and it may not be reproduced, in whole or in part, stored in a retrieval system or transmitted in any form or by any means photocopying, electronic, electrostatic, magnetic, pdf, mechanical, recording or otherwise, without prior permission in writing from Accounting Technicians Ireland, 47-49 Pearse Street, Dublin 2. Acknowledgement This text was reviewed and edited by Ms. Lisa Sturgeon. Lisa is a solicitor and an associate at Napier & Sons, Belfast. Referencing For the purposes of consistency, all references to he or she will be referred to as he in this publication. No other implication whatsoever is implied from this policy. xii 117575 Law NI Manual 2018 - Manual.indb 12 30/08/2018 14:41

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SYLLABUS: LAW AND ETHICS (NI) Module: Law and Ethics Mandatory Module Northern Ireland Syllabus xvii 117575 Law NI Manual 2018 - Manual.indb 17 30/08/2018 14:41

Syllabus : Module: Law and Ethics (NI) Law and Ethics (NI) Law and Ethics Subject Status Mandatory Terminal Exam 100% Module Pass Mark 50% Learning Modes Pre-requisite: Direct Lectures, Workshops, Online Tutorials, Online Learning Programme Entry Requirements Key Learning Outcome The key outcome of this module is to provide learners with Knowledge and understanding of the key concepts and fundamental principles of law and ethics and the practical application of them in the context of business and commercial activities. Emphasis will be on the recognition of legal and ethical issues which may require the expertise of specialists. Key Syllabus Elements and Weightings 1. Introduction to Law... 40% 2. Company Law... 40% 3. Corporate Governance, Ethics & Data Protection... 20% xviii 117575 Law NI Manual 2018 - Manual.indb 18 30/08/2018 14:41

Law and Ethics (NI) Syllabus : Module: Law and Ethics (NI) Learning Outcomes linked to Syllabus Elements Introduction to Law On completion of this aspect of the module, learners will have acquired the following knowledge, competencies and know-how:- (a) (b) (c) An understanding of the role various sources of law, divisions of law, the structures and jurisdictions of the Courts; A detailed comprehension of the key elements and principles of a valid contract and employment law; Knowledge of the general principles of tort, agency and consumer law. Company Law On completion of this aspect of the module, learners will have acquired the following knowledge, competencies and know-how:- (a) (b) (c) (d) (e) (f) (g) (h) The ability to identify and differentiate between various business entities; An understanding of the registration procedure of legal entities; An understanding of the consequences of incorporation; Be able to describe and analyse the roles of the officers of a company; A detailed comprehension of the concept of capital and the ability to identify the different methods by which a company can raise share capital and loan capital; The recognition of the statutory requirements in specific business scenarios pertaining to financial statements, reports and returns scenarios; A detailed understanding of the different types of meetings, resolutions and requirements to validate a meeting; An understanding of the concepts and the effects of receiverships and liquidations. Corporate Governance, Ethics & Data Protection On completion of this aspect of the module, learners will have acquired the following knowledge, competencies and know-how:- (a) (b) (c) (d) A basic understanding of the ethical obligations imposed upon persons dealing with financial information, products and services and in particular ethical obligations imposed upon company directors and auditors; Recognition of the main tenets of corporate governance that apply to both listed and unlisted companies, as well as the ethical obligations imposed under the voluntary code. An appreciation of Data Protection legislation and the requirements placed on an organization when storing and processing personal data, and processing data access requests. A basic understanding of the role of the Information Commissioner. xix 117575 Law NI Manual 2018 - Manual.indb 19 30/08/2018 14:41

Syllabus : Module: Law and Ethics (NI) Law and Ethics (NI) MODULE: LAW AND ETHICS (NI) Specific Functional Knowledge and Competencies Understanding Application Analysis Introduction to Law (40%) Sources of Law The UK Legislature Divisions of law: civil and criminal Structure and jurisdiction of the UK Courts EU Law (primary sources, secondary sources, EU institutions) l l l l Contract Formation of a contract: offer, acceptance, consideration, capacity and intention to create legal relations Terms of a contract: express terms, implied terms and exemption clauses Discharge of contracts, breaches of contract and remedies for breaches of contract Employment Law The contract of employment: contracts of services and contracts for services Dismissal: wrongful, unfair and constructive - available remedies - redundancy Agency Creation of agency, termination of agency, rights and duties Consumer Law The Consumer Rights Act 2015 Tort General principles of negligence (including professional negligence), remedies and defences l l l l l l l l l l l l l l xx 117575 Law NI Manual 2018 - Manual.indb 20 30/08/2018 14:41

Law and Ethics (NI) Syllabus : Module: Law and Ethics (NI) Specific Functional Knowledge and Competencies Understanding Application Analysis Company Law (40%) Introduction Various business entities: sole traders, companies (private and public, limited and unlimited) and partnerships Formation of a Company l l Memorandum and Articles of Association l l Registration procedure (including forms to be submitted to the Companies Registry) Consequences of incorporation, certificate of incorporation Company Finance Share Capital: classifications of share capital, types of shares, payment for shares, issuing at a premium, issuing at a discount l l l l l l Loan Capital: debentures and charges l l Management of a Company Directors: types of directors, appointment, removal, rights and duties Auditors: appointment, removal, powers and duties Financial statements reports and returns Company accounts and the annual return Meetings Types of meetings: Directors, AGM, EGM Procedures at meetings: voting, proxies, quorums etc. Company Conclusion Receivership and Liquidation (members and creditors voluntary and compulsory liquidation) l l l l l l l l xxi 117575 Law NI Manual 2018 - Manual.indb 21 30/08/2018 14:41

Syllabus : Module: Law and Ethics (NI) Law and Ethics (NI) Specific Functional Knowledge and Competencies Understanding Application Analysis Corporate Governance, Ethics & Data Protection (20%) Ethical Obligations on Company Officers Company directors and auditors ethical obligations including: (1) whistle-blowing obligations (money laundering, suspicion of indictable offences, financial irregularities etc) and (2) corporate offences (fraudulent, reckless and insider trading) Corporate Governance Rules Rules on corporate governance mandatory and non-mandatory listing rules voluntary code Data Protection Legislation Role of the Data Controller Rules for the storing and processing of Personal Data l l l l l l l Rules for processing data access requests l l Role of the Information Commissioner l l xxii 117575 Law NI Manual 2018 - Manual.indb 22 30/08/2018 14:41

Law and Ethics (NI) Syllabus : Module: Law and Ethics (NI) Assessment Criteria Assessment Techniques 100% Assessment based on the final examination. Format of Examination Paper 13 questions with 9 to be completed in total. Section A is compulsory answer 1 question (Corporate Governance, Ethics & Data Protection). Answer any 4 out of 6 questions in Section B (Company Law); Answer any 4 out of 6 questions in Section C (Introduction to Law). SECTION A: Corporate Governance, Ethics and Data Protection Question 1: 20 marks mixture of theory and problem based question. Compulsory question. SECTION B: Company Law Questions 2-7: 10 marks each mixture of theory and problem based questions. Answer 4 out of 6 questions SECTION C: Introduction to Law Questions 8-13: 10 marks each mixture of theory and problem based questions. Answer 4 out of 6 questions Essential Reading Law & Ethics (Northern Ireland) Author: Accounting Technicians Ireland Web Resources www.bailii.org www.accountancyireland.ie https://ico.org.uk/ (Information Commissioner s Office) Legislation Companies (Northern Ireland) Order 1986 The Companies (Northern Ireland) Order 1989 The Companies Act 2006 xxiii 117575 Law NI Manual 2018 - Manual.indb 23 30/08/2018 14:41

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Law and Ethics (NI) Table of Legislation TABLE OF LEGISLATION TABLE OF LEGISLATION Companies Act 2006 Companies Directors Disqualification (NI) Order 2002 Consumer Protection from Unfair Trading Regulations 2008 Consumer Rights Act 2015 Dogs (Amendment) Act Northern Ireland 2011 Employment Equality (Age) Regulations (Northern Ireland) 2006 Employment Rights (Northern Ireland) Order 1996 Equality Act (Sexual Orientation) Regulations (Northern Ireland) 2006 Insolvency (Northern Ireland) Order 1989 Limitation Act 1980 Limited Liability Partnership Act 2000 Limited Partnership Act 1907 Money Laundering Regulations 2007 Partnership Act 1890 Proceeds of Crime Act 2002 Student Loans (Amendment) Act (Northern Ireland) 2011 Unfair Contract Terms Act 1977 (UCTA) as amended Unfair Terms in Consumer Contracts Regulations 1999 Working Time Regulations (Northern Ireland) 1998 Please Note: Students are only expected to be familiar with the parts of the legislation that are referred to in this manual. Students are not expected to download the legislation in full. The material in this manual is sufficient for exam purposes. xxv 117575 Law NI Manual 2018 - Manual.indb 25 30/08/2018 14:41

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CHAPTER 1: THE NORTHERN IRELAND LEGAL SYSTEM CHAPTER 1 The Northern Ireland Legal System Law is a system of rules that exist in society to protect persons and their property. Law can be examined by distinguishing between criminal and civil law and learning about the role of courts in society. The courts interpret the rules of law, hold persons accountable for their actions and punish persons who break the law. Law is created from a number of sources and this chapter examines the establishment of a legal system in Northern Ireland and the impact of European law on the legal system in Northern Ireland. LEARNING OUTCOMES Upon completion of this chapter you should be able to: 1. Understand the role of the Constitution and identify the organs of State. 2. Define law and distinguish between criminal and civil law. 3. Describe the different court structures and discuss the jurisdiction of the criminal and civil law courts. 4. Identify the main sources of law in Northern Ireland. 5. Discuss the main types of European Legislation. 6. Identify the main European Institutions. REVISION RESOURCES EXAM QUESTIONS: Sample and Past papers are available from the website of Accounting Technicians Ireland and are essential aids when studying Law and Ethics topics. 1 117575 Law NI Manual 2018 - Manual.indb 1 30/08/2018 14:41

Chapter 1 : The Northern Ireland Legal System Law and Ethics (NI) 1.1 THE BRITISH CONSTITUTION A Constitution can be defined as a set of laws that state how a country should be governed. Some countries such as Ireland and the United States have a written Constitution, which means that all the laws are contained in one single document, known as the Constitution. This can be contrasted to the United Kingdom, where the Constitution is unwritten and so all the laws that state how the United Kingdom should be governed are not contained in one document, but come from several sources or documents. The main sources of the British Constitution come from: Acts of Parliament European and International Treaties EU law Common Law/Case law European and International Conventions There are those who would like the United Kingdom to adopt a written Constitution as they believe that if all the laws were codified in one document this would allow people s rights to be defined in clear and basic language and would ensure the maximum protection of these rights. Those in favour of retaining the current unwritten constitution argue that an evolving society needs a flexible interpretation of rules and rights and that a written constitution would instead create a set of rigid rules that are difficult to change. 1.1.1 The Organs Of State The Monarch is the head of the UK state, however, she does not exercise any power. The powers of the state are divided between the following three organs of state: the legislative, the executive and the judiciary. This division of power is known as the doctrine of the separation of powers and is an underlying principle in any democracy. This doctrine means that all power is not given to a single organ of state but is divided between all the three organs. In a state where there is a written Constitution, such as Ireland, the written document states how the powers are divided and kept separate; although in reality there is always some interaction and overlap between them. Although there is not a written Constitution in the UK it is possible to see the division of powers and how the separate organs function in practice. As you will see each of these three organs are involved in the law making process. The Legislature: The legislature is the law making body. In the UK, Parliament is the legislature and consists of the directly elected Members of Parliament (MP s) and the unelected members of the House of Lords. The legislative power is held by Parliament who draft and vote on the laws to come into effect. They therefore have the power to make new law or alter/repeal existing law. The Executive: The executive consists of the Crown and Government, including the Prime Minister and cabinet Ministers. They formulate policies for the effective implementation of the law. The executive power is held by the Government and it has the power to implement the laws passed by Parliament. The Judiciary: The Judiciary have the power of interpreting the law made by Parliament and apply the law correctly. They also have the power to create law. 2 117575 Law NI Manual 2018 - Manual.indb 2 30/08/2018 14:41

Law and Ethics (NI) Chapter 1 : The Northern Ireland Legal System 1.2 DEFINITION AND DIVISIONS OF LAW The law is a system of rules and regulations established to maintain order and ensure that justice, and access to it, prevails in society. The law provides for a court structure to determine if a rule has been broken and to prescribe sanctions and remedies for any such breach. 1.2.1 Divisions of Law The most common way of classifying law is to distinguish between criminal and civil law. However, it should be noted that there are also other classifications such as Public, Constitutional, and Administrative law. Criminal law The aim of criminal law is to uphold the morality of society by prohibiting acts contrary to public order and by punishing those who carry out such acts. Anyone accused of committing such acts will be charged with a criminal offence. Criminal offences range from minor offences, such as driving without a seatbelt to more serious offences, such as burglary, rape or murder. Sanctions for offences range from a fine to imprisonment depending on the seriousness of the offence. The prosecution of an offence is carried out by the Northern Ireland Public Prosecution Service (PPS) on behalf of the state in a criminal court. Generally, the PPS must prove beyond reasonable doubt that the accused committed the offence. This is a higher burden of proof than in the civil courts because of the overriding public interest and the serious and moral nature of a criminal prosecution. An example of a criminal offence in relation to company law is fraudulent trading (see 18.3 in the manual). This offence carries a maximum of 10 years imprisonment and/or a fine (Companies Act 2006 s. 993(3)(a)). Civil law The aim of civil law is to regulate and resolve disputes between parties. Civil actions are taken by one party who issues proceedings (a claim) against another party and do not generally involve the State (unless the wrongdoer is the state). The civil courts will determine if a private law right of the party is breached and, if so, will impose an appropriate remedy, for example the payment of compensation by one party to the injured party. In order to be found liable in civil law, generally the injured party must prove its case on a balance of probabilities that the other party was in the wrong. This means that the court determines which version of events is more or less or less likely to have happened; the plaintiff s version or the defendants version. Contract law is an example of civil law and is one of the most important areas for Accounting Technician students to be familiar with. Tort, consumer and employment law are all further examples of civil law which you will study. Public law and private law Law can be further divided into public law and private law. Public law regulates relations between individuals and public bodies, for example government departments or local councils and deals with matters that affect society as a whole. Private law regulates relations between private individuals, 3 117575 Law NI Manual 2018 - Manual.indb 3 30/08/2018 14:41

Chapter 1 : The Northern Ireland Legal System Law and Ethics (NI) including businesses or companies. There is no public element in private law as it is for the private individual concerned to take an action against the other individual. Generally, criminal law is described as a public law and civil law is considered a private law. 1.2.2 Civil law v Criminal law The following table illustrates the comparison between criminal and civil law in Northern Ireland: Factors Criminal Law Civil Law Classifications Parties Involved Objectives Tests applied by the Court to determine liability Heard by Public law referred to as a Prosecution Prosecution (in the name of the Queen) and the Defence e.g. R v Jones Defendant is prosecuted: Punishment as well as incapacitation, retribution, deterrence and rehabilitation Beyond all reasonable doubt A judge acts as the tribunal of law and a jury acts as the tribunal of fact Private law referred to as a civil action Claimant and the Defendant e.g. Smith v Clarke Defendant is sued: Compensation and ceasing the unwanted action Balance of probabilities (lower than criminal - question of whether more or less likely) Generally by a judge sitting alone. Some civil actions are heard by a judge and jury. Finding Guilty/not guilty Liable/not liable Commencement of proceedings Penalties/ Remedies Examples PPS through summons or indictment Fines, imprisonment, probation orders, community service orders Murder, theft, fraudulent trading etc Initiated by way of pleadings / writ Damages, injunctions, rescission, court orders, an account for profits Breach of contract, negligence, trespass 1.2.3 Criminal and civil cases in practice One incident can give rise to both criminal and civil proceedings. For example, if a pedestrian is knocked down by a speeding driver, the State can prosecute the driver for the offence of speeding in the criminal courts and the pedestrian can sue the driver for compensation for negligence in the civil courts. The infamous case of OJ Simpson is an example of one incident that led to two sets of proceedings. Despite the fact that OJ Simpson was found not guilty of murder in the criminal courts, the family of his murdered wife issued an action in the civil courts where he was found liable. Also, more recently in 4 117575 Law NI Manual 2018 - Manual.indb 4 30/08/2018 14:41

Law and Ethics (NI) Chapter 1 : The Northern Ireland Legal System Northern Ireland, defendants in the Omagh Bomb trial, who were found not guilty in the murder trial were later found liable in the civil law trial. The criminal court proceedings require a higher standard of proof than the civil law proceedings. The prosecution must prove beyond all reasonable doubt that the driver was guilty of an offence. In the civil courts, the pedestrian must prove on the balance of probabilities that the driver caused the injuries. As the OJ Simpson case and the Omagh Bomb trial prove, it may be possible to be found liable in civil proceedings even when you are found not guilty in criminal proceedings. This is because the criminal proceedings face the higher burden of proof. Note: Any conviction in the criminal court is admissible in the civil proceedings to prove that the offence was committed, thus providing the basis of the civil action. 1.3 STRUCTURE AND JURISDICTION OF THE COURTS The distinction between criminal and civil law means that the courts are divided into two separate court structures. Both structures are shaped like a pyramid and are hierarchal in nature. All cases start in the lower (inferior) courts in the first instance and only a few cases will reach the higher (superior) courts. As you will see the majority of cases start and finish in the lower courts, but a person has the right to appeal to a higher court against certain decision made by the lower court. 1.3.1 The criminal court structure 5 117575 Law NI Manual 2018 - Manual.indb 5 30/08/2018 14:41

Chapter 1 : The Northern Ireland Legal System Law and Ethics (NI) JURISDICTION OF THE CRIMINAL COURTS: 1. Magistrates Court The Magistrates Court deals mostly with minor or less serious criminal law matters and is known as the inferior criminal court. There are 21 petty session districts in Northern Ireland and the particular court that is assigned to hear your case depends upon (1) where the alleged offence was committed or (2) where the defendant resides. In the Magistrate s Court, one legally qualified Magistrate called a Resident Magistrate (RM) sits alone, without a jury. The RM will listen to the evidence and decide if the defendant is guilty or not. Magistrates are addressed as Your Worship. The RM will send the defendants who are charged with more serious offences (indictable offences) to the Crown Court for hearing. In relation to criminal law matters in the Magistrates Court, the court normally only hears summary offences (minor offences) and 98% of proceedings started in this court also end in this court. However a defendant may opt to have a case which could be tried by a jury tried before a Resident Magistrate alone. The maximum sanction that can be imposed by the court is a 18 months imprisonment and/or a fine not exceeding 5,000. The defendant has a right to appeal to the County court (civil court) against his conviction and/or sentence imposed by the Magistrate s court. If he pleads guilty he can only appeal against his sentence. There is also the option to appeal by way of case stated where it appears that the lower court has wrongly interpreted the law. The Youth Court is part of the Magistrates court and hears cases where a young person aged between 10 and 17 years old is charged with a criminal offence. The Resident Magistrate sits with two lay Magistrates (non-legally qualified persons) and hears the case. There is no jury. There is restricted access into the court when cases are being heard and only some persons are allowed into the court; the young person charged, their legal guardian, lawyers for the young person and for the prosecution, probation officers and journalists. Journalists may be restricted from printing all the information, such as the young person s name. 2. Crown Court The Crown Court sits at 13 locations throughout Northern Ireland and has two main functions: (1) Hears all indictable (serious) offences, such as murder, rape, conspiracy and robbery. Proceedings will commence with the arraignment of the accused where he will plead guilty or not guilty. The vast majority of cases are heard by one Judge and a Jury (consisting of 12 persons male and female) selected from members of the Public. There is a right to appeal against conviction and/ or sentence or to appeal by way of case stated. The defendant may appeal his case to the Court of Appeal on a point of law only, but this right to appeal is not automatic. The defendant must first get leave to appeal which in essence is permission by the Judge to appeal to a higher court. (2) Hears appeals against conviction or length of sentence from the Magistrates Court In appeal cases the Judge sits without a jury. The Judge will rehear the matter and the appeal will be either dismissed and the conviction stands or the appeal will be allowed and the conviction overturned. If your conviction stands the length of your sentence may be reduced, increased or remain the same. 6 117575 Law NI Manual 2018 - Manual.indb 6 30/08/2018 14:41

Law and Ethics (NI) Chapter 1 : The Northern Ireland Legal System 2(a). Non-Jury trials Non-jury trials courts were previously known as the Diplock courts. The Diplock courts were introduced during the 1970 s in cases where the defendants were charged with paramilitary offences and it was considered that there was a risk of jury intimidation or tampering. Although the Diplock courts were abolished in 2007, the option to hold non-jury trials is still available but is no longer restricted to paramilitary offences. For example, a defendant charged with a serious and complex fraudulent offence under the Proceeds of Crime Act 2002 may be tried without a jury, provided it can be proved that there is a risk of jury intimidation. It is important to note that non-jury trials are only to be held in exceptional circumstances. 3. Court of Appeal The Court of Appeal is an appellate court and is the highest court in Northern Ireland, although there is a right to appeal to the UK Supreme Court. This means that the court does not hear cases for the first time, but hears appeals from the lower courts concerning the application and interpretation of the law. Normally two to three judges will sit in each case (no jury). The Court is divided into two sections, civil and criminal. In relation to criminal law, the Court has jurisdiction to hear appeals from the Crown Court. After hearing the evidence, the Court of Appeal may exercise one of the following options: Allow appeal and acquit defendant Allow appeal and reduce, vary or increase sentence Allow appeal and order a retrial Dismiss appeal An appeal from the Court of Appeal lies in the UK Supreme Court, but only on a point of law of major public importance. 4. The Supreme Court The Supreme Court is the final court of appeal for civil cases in the United Kingdom and hears criminal appeals from England, Wales and Northern Ireland. It hears cases of the greatest public or constitutional importance affecting the whole population. It will only hear appeals regarding decisions on points of law in cases of major public importance. Five Justices usually will hear the case (this has been increased to seven or nine on occasion). There has to be an odd number in order to ensure that there can be a majority verdict. The Supreme Court is the only court at present in the UK where the proceedings can be televised. It is important to note that decisions by The Supreme Court are still subject to a higher law; European law. The importance and supremacy of European law is discussed later in this chapter. 1 1 As per note on the departure of the UK from the European Union, European law remains relevant to Northern Ireland until the UK completes the Article 50 process. 7 117575 Law NI Manual 2018 - Manual.indb 7 30/08/2018 14:41

Chapter 1 : The Northern Ireland Legal System Law and Ethics (NI) 1.3.2 The civil court structure JURISDICTION OF THE CIVIL COURTS: 1. Magistrates Court: As stated the magistrates court is mainly a criminal court, however, it does have jurisdiction to hear some civil law matters, such as applications for certain licences, for example, the licence to sell alcohol. And the court will hear some other civil matters relating to family law proceedings, ejectment disputes between landlord and tenant or debt collection matters. It is possible to appeal against the decision or by way of case stated to a higher court. 8 117575 Law NI Manual 2018 - Manual.indb 8 30/08/2018 14:41

Law and Ethics (NI) Chapter 1 : The Northern Ireland Legal System 2. County Court: The County Court is the largest civil court. Matters are heard in one of the seven County Court Divisions by County Court Judges. Judges are addressed as Your Honour. Due to the large volume of work County Court Judges are assisted by District Judges. Most of the civil work involves disputes in contract and tort with a value of less than 30,000 or in equity matters a value of less than 45,000. A District Judge will hear cases up to a value of 10,000 and any cases with a value less than 2000 will be dealt with by the informal Small Claims process. The County Court will also hear disputes in relation to the recovery and title of land, equity matters, such as trusts, and other matters including the granting of liquor licences and some family law matters, such as uncontested divorces. There is a right to appeal to the High Court on a decision made by the County Court or in some cases there may be a right to appeal directly to the Court of Appeal. 2(a) Small Claims Court: This court hears matters where the value of the claim is less than 2000. The court is designed so that it is not necessary to have a solicitor to represent you in the small claims court. If the respondent (person you are claiming against) does not turn up or you win your case then a county court judgment will be granted against the respondent. This judgment may affect the credit history of the respondent. The types of matters usually heard are debt recovery cases that relate to: compensation for faulty goods or compensation for unsatisfactory services disputes between landlords and tenants, for example where the deposit has not been returned or where there are rent arrears. disputes relating to damage to property 3. Tribunals: The Fair Employment Tribunal and the Industrial Tribunals hear cases that involve disputes between employers and employees. The Fair Employment Tribunal hears claims that relate to claims of discrimination on political or religious grounds and the Industrial Tribunal hears claims relating to all other disputes. For example, unfair dismissal, breach of employment contract, and claims of discrimination on grounds other than religion and politics, for example, grounds of age, sex, race, disability, or sexual orientation. This is provided in more detail in the employment chapter of this manual. 4. High Court: The High Court hears civil law matters and is divided into three divisions: Queen s Bench Division: This is the largest division and deals with actions based in tort and contract with a value over 15,000. It has a supervisory role over the inferior courts and most County Court appeals are heard in this division. Also, appeals from the Crown Court are dealt with here. The Queen s Bench Division is further divided into various separate sub-divisions, for example commercial law matters are listed in the commercial list and heard in the commercial court. 9 117575 Law NI Manual 2018 - Manual.indb 9 30/08/2018 14:41

Chapter 1 : The Northern Ireland Legal System Law and Ethics (NI) The Commercial Court: This court deals with cases involving national and international business disputes. The claims amongst other things can relate to the alleged breach of a business contracts. Claims that go to the commercial court usually involve complex financial and legal issues are dealt with as quickly and efficiently as possible. Chancery Division: Deals mostly with equity matters, such as land and trusts. It also deals with bankruptcy, winding up proceedings and other partnership and company law matters. Family Division: Deals with complex family law matters such as divorce, custody and adoption. High Court cases may be heard by any of the three Lord Justices of Appeal or by one of the ten High Court Judges. Trials will be heard by a single judge, but there is a right to trial by judge and jury in some cases, such as libel, slander, malicious prosecution and false imprisonment cases. Judges are addressed as My Lord or Your Lordship. All three divisions may hear appeals from inferior courts. There is a right to appeal a decision of the High Court to the Court of Appeal or in some situations, directly to the Supreme Court. 5. Court of Appeal (see also criminal law jurisdiction). The Civil Division of the Court of Appeal hears appeals from the High Court where the validity of a law is challenged and hears appeals by way of case stated from the High Court, County Court and the Industrial Tribunals (Industrial Tribunals will be discussed further in chapter 4). As stated the Court of Appeal may uphold, amend or reverse any decision of the previous court or order a new trial. 6. Supreme Court (See criminal law jurisdiction). 1.4 SOURCES OF NORTHERN IRELAND S LAW The legal system in Northern Ireland (in the UK generally) is a common law system and this means that both judges and Parliament are law making bodies. The UK Parliament and the Northern Ireland Assembly enact legislation that comes in the form of an Act of Parliament/Assembly. Legislation is regarded as the most important source of law and if there is a conflict between legislation and law created by judges, legislation prevails. Law created by judges is referred to as case-law. Case law is created when a judge gives a written judgment containing their decision on a dispute that has come before the court. When a similar dispute comes before a judge in a future case that judge will look back to previous written judgment of the other judges, and will be guided by these older judgments or precedents in making a decision in the present dispute. The third source of law comes from Europe. When the United Kingdom joined the European Union in 1973 this resulted in European law becoming a third source of law in the United Kingdom. 10 117575 Law NI Manual 2018 - Manual.indb 10 30/08/2018 14:41

Law and Ethics (NI) Chapter 1 : The Northern Ireland Legal System Therefore, there are three main sources of law in Northern Ireland: I. Legislation (made by the Parliament/Assembly) II. Case law (made by the Judges/Courts) III. EU Law (made by the European Institutions) 1.4.1 Legislation Legislation is regarded as the most important source of law in the UK. Under the UK democracy, the fundamental concept of parliamentary sovereignty exists, which means that parliament is the supreme law-making body. In some common law countries where there is a written constitution, for example in Ireland, the legislation enacted by the Parliament can be challenged and invalidated if the legislation conflicts with a constitutional principle. As the UK does not have a written constitution, Parliament can make, change and alter laws without such challenges. In Northern Ireland, legislation is created by both Parliament and the NI Assembly (not all legislation passed by the UK Parliament applies to Northern Ireland). Legislation is commonly referred to as statute law and consists of primary and secondary legislation. Primary legislation: Primary legislation is enacted by both Parliament and the NI Assembly. It is implemented in the form of Acts, for example, Companies Act 2006 or in the form of Orders, for example the Employment Rights (NI) Order 1996. A Parliament Act is implemented into law after it has passed through and been approved by the House of Commons (Parliament), the House of Lords and has received Royal Assent. Northern Ireland Acts are passed by the Assembly and do not pass through the House of Commons and Lords, but go through a similar process of debate and approval in the Assembly. Acts passed by the Assembly must receive Royal Assent from Her Majesty before they become law. Parliament and the Assembly have the power to make new law, alter existing law and codify common law (i.e.write into legislation the law made by judges). An example of Parliament codifying principles that have emerged in case law is the Companies Act 2006. Prior to this legislation, some of the duties owed by a director to a company were not written into statute. These duties were referred to as the fiduciary duties of a director and were enshrined in common law. These duties have now been given a statutory footing and are incorporated in the Companies Act 2006 ss. 170-181. Recent primary legislation passed by the NI Assembly include the Environmental Better Regulation Act (Northern Ireland) 2016, the Addressing Bullying in Schools Act (Northern Ireland) 2016, the Employment Act (Northern Ireland) 2016 and the Fisheries Act (Northern Ireland) 2016. Delegated or Secondary legislation: Parliament/NI Assembly do not have the resources or time to implement every new piece of legislation, so a power is invested in them to delegate legislation to another body, such as a government minister or a public or local authority. This delegated legislation originates from the primary legislation and is also referred to as secondary legislation. Usually secondary legislation is much shorter than primary legislation in length. 11 117575 Law NI Manual 2018 - Manual.indb 11 30/08/2018 14:41