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Dunnes Stores Ireland Co. v. Ryan [2000] IEHC 141 (29th July, 2000)
THE
HIGH COURT
1999/33
JR
BETWEEN
DUNNES
STORES IRELAND COMPANY
DUNNES
STORES (ILAC CENTRE) LIMITED AND
MARGARET
HEFFERNAN
APPLICANTS
AND
GERARD
RYAN AND
THE
MINISTER FOR ENTERPRISE, TRADE AND EMPLOYMENT
RESPONDENTS
AND
IRELAND
AND THE ATTORNEY GENERAL
NOTICE
PARTIES
JUDGMENT
of Butler J. delivered on the 29th day of July, 2000.
BACKGROUND
1. The
factual background of this application is fully set forth and described in the
judgment of the Chief Justice in these proceedings delivered on the 8th
February, 2000. I respectfully adopt that description and repeat the same
hereunder as follows:-
"On
the 22nd July 1998, the second named respondent (hereafter "the Minister")
informed the third named applicant/ appellant, who is a director of the first
and second named applicants/ appellants, that she had decided to appoint an
authorised officer to examine the books and documents of the first and second
named applicants/ appellants pursuant to s.19 of the Companies Act 1990
(hereafter "the 1990 Act"). On the same day, Mr. George Maloney, the nominated
officer, also wrote to the third named respondent enclosing his warrants of
appointment.
These
steps were taken by the Minister following the furnishing to the Taoiseach of a
Report by Mr. Justice McCracken as the Sole Member of a Tribunal of Inquiry
appointed pursuant to resolutions of both Houses of the Oireachtas to inquire
into payments made to certain politicians or connected persons or political
parties by Dunnes Holding Company or any associated enterprises and/or by Mr.
Ben Dunne. That report concluded that such payments had been to Mr. Michael
Lowry TD and two companies with which he was associated and to Mr. Charles
Haughey TD by Mr. Ben Dunne, who was at the relevant time the chairman and an
executive director of Dunnes Holding Company. Correspondence then ensued
between the Minister and officers of the department on the one hand and the
third named applicant on the other hand in which the former expressed concern
that the report in question had disclosed a number of possible breaches of the
Companies Acts, 1963 to 1990, and requested the production of various books and
documents relating to the first and second named applicants. Although some at
least of the books and documents of the applicants were made available in
response to this request, the correspondence culminated in the letter of 22nd
July already referred to in which the Minister said that she was invoking her
powers under s.19 of the 1990 Act. The third named applicant asked the
Minister in a letter of the 23rd July to indicate the basis of the appointment
of Mr. Maloney and, not being satisfied with the response, initiated
proceedings by way of judicial review in the High Court seeking to challenge
the validity of the appointment. Those proceedings were grounded both on the
failure of the Minister to give reasons and also on what was claimed to be a
conflict of interest which should have precluded Mr. Maloney's appointment as
the authorised officer. The latter ceased to be an issue when Mr. Maloney
retired and was replaced as the authorised officer by the first named
respondent in these proceedings.
Those
judicial review proceedings were heard by Laffoy J, who, in a reserved
judgment, concluded that the Minister was obliged to give reasons for her
decision since otherwise the applicants would be entirely frustrated in any
challenge they might seek to make to her decision. Although she did not quash
the appointment
of
the authorised officer, Laffoy J did order that the Minister should swear an
affidavit setting out in full the reasons for her decision to appoint the
authorised officer. The response to that order was an affidavit of Mr. Paul
Appleby, the Principal of the Company Law Administration Section of the
Department of Enterprise, Trade and Employment, sworn on the 27th November
1998, the schedule to which sets out what were stated to be the reasons for the
Minster appointing the authorised officer.
The
schedule included a statement that the circumstances set out in it:-
'gave
substantial cause for concern as to the standard of corporate governance
operating in Dunnes Stores Ireland Company...'
The
applicants were dissatisfied with the reasons as thus set out in the schedule
to Mr. Appleby's affidavit. They also claimed that the Minister's department
was disseminating information which it was obtaining from the applicants to the
media without the consent of the applicants. In addition, they alleged that
the demand made by the first named respondent for the production of documents
was unreasonable both in its extent and the time allowed for compliance and
that the applicants feared that it would be used as a justification for the
criminal prosecution of the applicants and an application for a search warrant
pursuant to s.20 of the 1990 Act with attendant unfavourable publicity. In the
result, the present proceedings were instituted beginning with an application
to the High Court for leave to apply by way of an application for judicial
review, for specified reliefs. They can be summarised as follows:-
(1) Orders
of
Certiorari
quashing the decision of the Minister purporting to appoint an authorised
officer to examine the books and records of the first and second named
applicants and, specifically, quashing the appointment of the first named
respondent for that purpose.
(2) An
order of prohibition or an injunction preventing or restraining the first named
respondent from acting as such an authorised officer;
(3) Declarations
that the provisions of s.19(5) and (6) of the 1990 Act are invalid having
regard to Articles 38.1 and 40.1 of the Constitution;
(4) A
declaration that s.19(6) of the 1990 Act does not permit the use of statements
made by a person in evidence in any criminal prosecution against that person;
(5) A
declaration that no books or documents or information obtained by the first
named respondent may be given or communicated to any person except pursuant to
s.21 of the 1990 Act and an injunction restraining the respondents from
communicating to any person such material.
(6) A
declaration that any information, books and/or document furnished to the
respondents by the applicants should not be admissible in any subsequent
proceedings unless the applicants explicitly stated that it was furnished to
the respondents voluntarily.
The
High Court (Budd J) having given the leave sought by the applicants, a
statement of opposition was filed on behalf of the respondents. A notice of
motion was then brought on behalf of the applicant seeking the reliefs already
set out. The hearing of the motion before the High Court (Kinlen J) was on
both affidavit and oral evidence. There were both written and oral submissions
on behalf of the applicants, the respondents and the notice parties.
In
a reserved judgment delivered on the 6th July 1999, the learned High Court
judge rejected the claim on behalf of the applicants that the appointment by
the Minister of the first named respondent as an authorised officer was
invalid. He also concluded, however, that the first named respondent had acted
unreasonably in requiring the books and records specified by him, both having
regard to the extent of the requisition and the time afforded for compliance
with it, and in requiring the third named applicant and/or other officers of
the first named applicant to attend a meeting with him and answer questions put
to them by him and that the requisition should be quashed. Since that relief
had not been claimed on behalf of the applicants, he gave them liberty to amend
their statement of grounds so as to include that claim."
2. The
Supreme Court set aside the said Order of the High Court in its entirety and
remitted the proceedings herein to the High Court for a determination of the
issues in respect of which leave to apply for Judicial Review was granted
including, if necessary, the constitutional issue.
3. The
evidence adduced at this hearing consisted of the affidavits sworn herein and
the exhibits therein referred to and the transcript of evidence of Mr George
Maloney and Mr Paul Harnan at the hearing before Mr Justice Kinlen on Thursday
the 29th and Friday 30th April, 1999. Oral and written submissions were made
on behalf of the applicants and on behalf of the respondents and notice parties.
“19.—(1)
The
Minister may, subject to subsection (2), give
directions
to any body being—
(
a )
a
company formed and registered under the
Companies
Acts;
......
requiring
the body, at such time and place as may be specified in the directions, to
produce such books or documents as may be so specified, or may at any time, if
he thinks there is good reason so to do, authorise any officer of his, on
producing (if required so to do) evidence of his authority, to require any such
body as aforesaid to produce to him forthwith any books or documents which the
officer may specify.
(2)
Directions
may be given by the Minister if he is of the opinion that there are
circumstances suggesting that—
(
a )
it
is necessary to examine the books and documents of the body with a view to
determining whether an inspector should be appointed to conduct an
investigation of the body under the Companies Acts; or
(
b )
that
the affairs of the body are being or have been conducted with intent to
defraud—
(i)
its creditors,
(ii)
the creditors of any other person, or
(iii)
its members; or
(
c )
or
(
d )
that
the affairs of the body are being or have been conducted in a manner which is
unfairly prejudicial to some part of its members; or
(
e )
........;
or
(
f )
that
any actual or proposed act or omission or series of acts or omissions of the
body or on behalf of the body are or are likely to be unlawful;....... or
(
g )
that
the body was formed for any fraudulent purpose; or
(
h )
that
the body was formed for any unlawful purpose.
(3)
(4) Any
power conferred by or by virtue of this section to require a body or other
person to produce books or documents shall include power—
(
a )
if
the books or documents are produced—
(i)
to take copies of them or extracts from them; and
(ii)
to require that person, or any other person who is a present or past officer
of, or is or was at any time employed by, the body in question, to provide an
explanation of any of them;
(
b )
if
the books or documents are not produced, to require the person who was required
to produce them to state, to the best of his knowledge and belief, where they
are.
(5)
If
a requirement to produce books or documents or provide an explanation or make a
statement which is imposed by virtue of this section is not complied with, the
body or other person on whom the requirement was so imposed shall be guilty of
an offence; but where a person is charged with an offence under this subsection
in respect of a requirement to produce any books or documents, it shall be a
defence to prove that they were not in his possession or under his control and
that it was not reasonably practicable for him to comply with the requirement.
(6)
A
statement made by a person in compliance with a requirement imposed by virtue
of this section may be used in evidence against him.
(7)
Nothing
in this section shall prevent the Minister from authorising a person other than
an officer of his to exercise the functions which an officer of his may
exercise under this section and, where the Minister so authorises, such person
shall have the same rights, duties and obligations as if he were such officer
.”
5. As
indicated the Minister has, pursuant to the order of Miss Justice Laffoy, now
delivered her reasons for the appointment of an authorised officer. The same
appear in a schedule annexed to the affidavit of Paul Appleby sworn on the 27th
November, 1998. These reasons are dealt with by the applicants under four
broad headings, namely:- Inspectorship/Corporate Governance; Revenue Creditor;
Concerns of Members; and Illegality.
6. The
first and principal ground upon which relief is sought by the applicants herein
is set forth for at paragraph (a) of the re-amended statement grounding
application for judicial review as follows:-
"The
Second Named Respondent has acted unreasonably and/or irrationally; mala fide
and/or vexatiously; ultra vires and/or in a manner which is an abuse of her
powers, in making the decision to appoint the First Named Respondent;"
the
paragraph goes on to enumerate 11 instances under this heading.
7. It
has already been acknowledged and it has been decided by Laffoy J. in the
previous hearing above referred to that the power conferred on the Minister by
s.19 of the 1990 Act is judicially reviewable. The Applicants, in one of their
later submissions, have said that this case depends upon one essential issue,
namely:-
“Do
the reasons ultimately furnished by the Minister sustain the decision to
appoint an authorised officer?”
8. I
agree and I propose to go through the reasons offered by the Minister as
follows:-
9. A. Inspectorship/Corporate
Governance.
10. B. The
Revenue as Creditor.
11. C. The
Concerns of Members.
D. Illegality.
A. Inspectorship/Corporate
Governance
12. The
Minister refers to s.19(2)(a) and says that the circumstances outlined under
the following (three) headings give substantial cause for concern as to the
standards of Corporate Governance operating in Dunnes Stores Ireland Company
and Dunnes Store (Ilac Centre) Limited and suggests that it is necessary to
examine the books and documents of the company to determine whether an
inspector should be appointed to conduct an investigation of the body under the
Companies Acts.
Section
19(2) as quoted above, provides, inter alia, that directions may be given by
the Minister if she is of the opinion that there are circumstances suggesting
that it is necessary to examine the books and documents of the body with a view
to determining whether an inspector should be appointed. I accept that there
is no evidence that it is “necessary” to examine the books and
documents for that purpose.
-580B. The
Revenue as Creditor
13. Again,
as quoted, s.19(2)(b)(ii) of the 1990 Act provides that directions may be given
by the Minister if she is of the opinion that there are circumstances
suggesting that the affairs of the company are being conducted with intent to
defraud the creditors or any other person. The Minister says that the Revenue
Commissioners are such a “person” in this case and refers to the
evidence of payments to Mr. Michael Lowry indicating that the same were made to
assist Mr. Lowry to evade the tax.
14. This
reason is simply unsustainable. The Minister has no right to pass on any
information gained because the Revenue is not listed as a “competent
authority” under s.21 of the 1990 Act. Counsel for the Respondent quite
properly drew my attention to the fact that the Revenue were added to the list
of bodies referred to in s.21 by the Companies (Amendment) Act, 1999. This
amendment, if anything, lends support to the Applicants’ contention.
C. The
Concerns of Members
15. The
Minister says that there are circumstances suggesting that the affairs of the
companies have been conducted with intent to defraud its members or in a manner
which is unfairly prejudicial to some part of its members and she cites the
report of the McCracken Tribunal saying that the same discloses that a large
number of payments were made to various parties from an account in the Marino
Branch of the Bank of Ireland; that these are acknowledged to be the property
of Dunnes Stores; that at least a portion of the funds in this account was
apparently supplied by a series of cheques drawn by Mr. Ben Dunne on the Ulster
Bank Account operated by Dunnes Stores Ireland Company in College Green,
Dublin. Further reference is made to the McCracken Tribunal Report and to
Conclusion 37 appearing at page 73 thereof which, it is argued, indicates,
inter alia, that the large majority of payments considered in its report were
made by Mr. Ben Dunne without the knowledge or approval of his co-shareholders.
In these circumstances, it is argued, that it is necessary to examine the books
and documents of the companies to determine whether or not the affairs of the
companies had been conducted with intent to defraud its members or in a manner
which was unfairly prejudicial to some part of its members.
16. The
Applicants contend that it is stretching credulity too far to contend that the
Minister appointed an authorised officer out of concern for members of the
Dunnes family who had, long before the 22nd July, 1998, compromised their
differences and gone their separate ways. I agree. There is no evidence of
complaints by any member of the Company.
D. Illegality
17. The
Minister contends that the illegality which she has detected in the past
sustains the appointment under s.19(2)(f). The said sub-section, as quoted
above, provides that directions may be given by the Minister if she is of the
opinion that there are circumstances suggesting that “
any
actual or proposed Act or omission or series of Acts or omissions of the body
or on behalf of the body are or are likely to be unlawful
”.
Where sub-sections (b) and (d) of the section use the present with the
alternative of the past tense, this sub-section (f) clearly and unambiguously
uses the present or, in the alternative, the future tense. I accept,
therefore, the contention that the sub-paragraph in question deals only with
contemporaneous or ongoing illegality, not illegality of an historical kind.
18. The
question of the unreasonableness or irrationality of a decision was considered
by Henchy J in
The
State (Keegan) -v- Stardust Victims Compensation Tribunal
,
(1986) I.R. 642. At page 658 of the report Henchy J stated as follows:-
“I
would myself consider that the test of unreasonableness or irrationality in
judicial review lies in considering whether the impugned decision plainly and
unambiguously flies in the face of fundamental reason and common sense. If it
does, then the decision-maker should be held to have acted ultra vires, for the
necessarily implied constitutional limitation of jurisdiction in all
decision-making which affects rights or duties requires, inter alia, that the
decision-maker must not flagrantly reject or discard fundamental reason or
common sense in reaching his decision.”
19. I
am satisfied that the Minister’s decision to appoint an authorised
officer, if based on the reasons summarised at paragraphs a, b, c and d above
is unreasonable and irrational in that it plainly and unambiguously flies in
the face of fundamental reason and common sense and that the same is
ultra
vires
.
20. The
fact that the Minister gave the reasons only after being ordered to do so by
the Court has been strongly commented upon and has been argued to show some
form of mala fides. I am satisfied that there is no evidence of mala fides on
the part of the Minister. I am further satisfied that there is absolutely no
evidence that the Minister, or any person in her department, was responsible
for unauthorised disclosures or leaks.
OTHER
GROUNDS
“The
Second named Respondent failed to have due regard for the principles of natural
and constitutional justice and/or fairness...”
21. I
do not accept that the Applicants were in any way hampered in their challenge
to the Minister’s decision as a result of any of the matters set forth
under the foregoing heading and it was not seriously argued that they were.
“The
First and Second named Respondents have failed to indicate the ambit of their
enquiry adequately or at all and/or have purported to undertake an enquiry
which is disproportionate and excessive in its ambit and is unsupported by any
facts or any adequate facts as would justify an enquiry of such breath and
expense.”
22. I
do not accept the “proportionality” argument. If it is the case
that the authorised officer was properly appointed under s.19, then there is no
evidence to suggest that his enquiries are in any way disproportionate or
excessive as suggested.
“The
First named Respondent has served what purports to be a demand for
documentation which is unreasonable and/or ultra vires and/or vexatious.”
23. I
do not recall it being argued that the demand in question was, of itself, ultra
vires. As deposed to at paragraphs 7 to 14 of the Affidavit of Gerard Ryan
sworn on the 19th February, 1999, it had been ordered by Miss Justice Laffoy
that no further action should be taken on foot of his appointment until after
the 4th January, 1999. Between the 5th January, 1999 and the 18th January,
1999 (the date of the said letter) there were communications between Mr. Ryan
and the Respondents’ Solicitors wherein Mr. Ryan was seeking to arrange a
meeting with officers of Dunnes Stores Ireland Company for the purpose of
discussing the request for books and documents. This request for a meeting
seemed perfectly reasonable to me and, when the same could not be arranged, Mr.
Ryan wrote on the 18th January referring to the recent history of his request
for a meeting and requiring production of documents “not later than 4.00
p.m on Friday, 22nd January, 1999”. The range of documents requested
would appear to be enormous and is described at paragraphs (i) or (iv) on the
second page of the said letter. I am satisfied that the making of such request
by an authorised officer would be lawful but for the fact that only four days
were given to produce this mass of documents. On any view the time allowed was
unreasonable.
The
Constitutional Issue
24. As
pointed out by the Chief Justice in the judgment in this case hereinbefore
referred to, the Supreme Court has made it clear on more than one occasion that
where the issues between the parties can be determined and finally disposed of
by the resolution of an issue of law other than constitutional law, the Court
should proceed to determine that other issue first. If that determination
disposes of the case, then the Court should refrain from expressing any view on
any constitutional issue that may have been raised and he refers to the case of
Murphy
-v- Roche
,
(1987) I.R. 106 and
Brady
-v- Donegal County Council
,
(1989), I.L.R.M. 282.
25. By
reason, therefore, of my first finding above, namely, that the appointment of
the First named Respondent was ultra vires, this Court should not proceed
further to consider the constitutional issue that has been raised.
© 2000 Irish High Court
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