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Dunnes Stores (Ireland) Company v. Ryan [2002] IEHC 61 (5 June 2002)

THE HIGH COURT

1999/33 J.R.

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 Mr. Justice Kearns delivered the 5th day of June 2002.

1.      This case is the constitutional leg of the multiple challenge launched by the Applicants against the decision of the second named Respondent whereby the first named Respondent was appointed as her authorised officer pursuant to Section 19 of the Companies Acts, 1963 - 1990 to examine the books and records of Dunnes Stores Ireland Company and Dunnes Stores (Ilac Centre) Limited.

2.      By Order dated the 21st day of January, 1999, Budd J. gave leave to the Applicants inter alia to seek:-

(a) A Declaration that the provisions of Section 19 (5) of the Companies Act, 1990 are in breach of the fundamental rights of the Applicants herein and are invalid and have no effect having regard to Articles 38.1 and 40.1 of Bunreacht na hEireann.

(b) Further or in the alternative a Declaration that the provisions of Section 19 (6) of the Companies Act, 1990 are in breach of the fundamental rights of the Applicants herein and are invalid and of no effect having regard to Articles 38.1 and 40.1 of Bunreacht na hEireann.

(c) A Declaration that Section 19 (6) of the said Act does not permit the use of statements made by a person in evidence in any criminal prosecution against that person whether or in the alternative that Section 19 (4) thereof does not abrogate any privilege that any person would otherwise possess.

3.      The grounds upon which relief was sought were stated as follows:-

(d) The provisions of the Companies Act, 1990 which are impugned are contrary to Bunreacht na hEireann and are in breach of the rights of the Applicants in that, inter alia, they:-

(i) fail to have any or any due regard to the Applicants' rights to confidentiality and/or privacy,

(ii) fail to have due regard to the Applicants' privilege against self incrimination,

(iii) fail to protect and vindicate the Applicants' right to fair procedures, natural and constitutional justice and equality before the law, and

(iv) constitute an unwarranted and unjustified interference with the property rights of the Applicants."

BACKGROUND

4.      On the 11th of September, 1997 the second named Respondent (hereafter "the Minister") wrote to the 3rd named Applicant (hereafter "Mrs Heffernan") stating:-

"The report of the Tribunal of Inquiry (Dunnes Payments) has disclosed a number of possible breaches of the Companies Acts, 1963 - 1990 as I have responsibility for these Acts, I have decided that my department should proceed to make inquiries of certain companies to clarify what breaches did in fact take place."

5.      The report referred to was that of a Tribunal established under the Tribunals of Inquiries Acts, 1921 - 1998, of which the sole member was Mr. Justice McCracken. The remit of the Tribunal was to inquire in to certain payments alleged to have been made to Mr. Charles Haughey T.D. and Mr. Michael Lowry T.D. It is not in dispute that payments had been made by the first and second applicants (hereafter "the Companies") to the two persons concerned and to companies with which they, or members of their family were associated. This was found to be a fact by the Tribunal in its report and it is also not in dispute that the payments were made at a time when the Companies were effectively under the stewardship of Mr. Ben Dunne. The payments came to light as result of proceedings which were instituted by other shareholders and directors of the companies, including Mrs. Heffernan against Mr. Ben Dunne. These proceedings were ultimately settled between the family members. Mrs. Heffernan and her brother, Mr. Frank Dunne had also appointed the firm of Accountants, Price Waterhouse, to carry out an independent inquiry into the manner in which the affairs of the company had been conducted under Mr. Ben Dunne's stewardship. That report was made available both to his Honour Judge Buchanan, who at the request of the Government had carried out an initial inquiry into the question of the irregular payments, and to the Tribunal presided over by Mr. Justice McCracken.

6.      Following receipt of the letter of 11th September from the Minister, Mrs. Heffernan wrote to her expressing her concern that the Company should be subjected to a further inquiry which, she claimed, was unnecessary and would result in further damaging publicity to the companies. Further correspondence followed which culminated in a letter dated 22nd July, 1998 in which the Minister wrote as follows:-

"I now write to indicate that I have decided to appoint an authorised officer to examine the books and documents of (the companies) and to provide such explanations as are appropriate. The legal basis for the appointment to Dunnes Stores Company is paragraphs (a), (b)(ii), (b)(iii), (d), (f) of section 19 (2) of the Companies Act, 1990, while that to the appointment of Dunnes Stores (Ilac Centre) Limited is paragraphs (a), (b) (ii), (f) of Section 19 (2) of the 1990 Act. You may know that Section 21 of the 1990 Act contains very strict limitations on the publication or disclosure of any information obtained by me on foot of a Section 19 examination of books and documents."

7.      The letter went on to state that the authorised officer was Mr. George Maloney, F.C.C.A., who for reasons of no relevance to the present proceedings, was later replaced by Mr. Gerard Ryan, the first named Respondent.

8.      On the 4th of August, 1998, the companies were given leave by the High Court to apply by way of Judicial Review for Orders of Certiorari quashing the decisions of the Minister to appoint the authorised officer pursuant to Section 19 of the 1990 Act on two principle grounds, namely:-

(a) The failure of the Minster to give any or any adequate reasons for the purported appointment of the authorised officer,

(b) An alleged conflict of interest which in any event vitiated the appointment of Mr. Maloney as the authorised officer.

9.      Laffoy J. in a judgment, reported sub nom Dunnes Stores Ireland Company and Others v. Maloney and Another (1999) 3 I.R. 543 granted the relief sought on the ground that the companies were entitled to be informed of the reasons which formed the basis of the Minister's decision to appoint an authorised officer. She also found that the extent of the demand for documents made by the authorised officer was excessive and unreasonable.

10.      Thereafter on the 27th of November, 1998, Mr. Paul Appleby, Principal of the Company Law Administration Section of the Ministers Department swore an Affidavit, the schedule to which set out the purported reasons for the appointment of the authorised officer.

11.      The present proceedings were then instituted seeking inter alia relief by way of Certiorari quashing the decision of the Minister to appoint the authorised officer and further claiming that the provisions of Section 19 (5) and (6) of the 1990 Act were invalid on constitutional grounds set out above. The hearing of the Motion having come on before the High Court, the claim on behalf of the Applicants that the appointment by the Minister of the first named Respondent as an authorised officer was invalid was rejected. It was concluded, however, that the first named Respondent had acted unreasonably in requiring the books and records specified by him and, since that relief had not been claimed on behalf of the applicants, they were given liberty to amend their statement of grounds so as to include that claim. The High Court Judge made no finding as to the constitutionality of the 1990 Act and an appeal was brought to the Supreme Court. The Supreme Court set aside the Order of the High Court in its entirety on the 8th of February, 2000 and the proceedings were remitted to the High Court for a determination of the issues in respect of which leave to apply for Judicial Review had been granted including, if necessary the constitutional issue.

12.      That hearing came on before Butler J. in the High Court who on the 29th of July, 2000 determined that the Applicants were entitled to an Order of Certiorari in respect of the decision of the Minister purporting to appoint an authorised officer to examine the books and records of the companies and the decision of the first named Respondent by which the first named Respondent purported to require from Mrs. Heffernan the books and records set out in a letter dated the 18th of January, 1999.

13.      Butler J. held that the essential issue was as to whether the reasons ultimately furnished by the Minister sustained her decision to appoint an authorised officer. He found there was no evidence that it was "necessary" to examine the books and documents of the company in order to determine whether an inspector should be appointed to conduct an investigation of Dunnes Stores Ireland Company under the Companies Acts. He further found that the reason given by the Minister that it was necessary to examine the books and documents of the same company in order to determine whether payments by or on behalf of the company were made for the purpose of further defrauding the Revenue Commissioners or the Creditors of any other person was unsustainable. In view of the findings and conclusions arrived at, Butler J. was of the view that he should not go on to consider whether the relevant provisions of the 1990 Act were invalid having regard to the provisions of the Constitution.

14.      In a Judgment delivered on the 1st day of February, 2002, the Supreme Court held that the present inquiry was justified in terms of Section 19 where inter alia there were circumstances suggesting that the affairs of the body had been conducted in a manner which was unfairly prejudicial to some part of its members. It further held that the range of documents sought was not unduly extensive, having regard to the scale of the misuse of the companies assets which had been identified.

15.      The documents sought pursuant to Section 19 are described in a letter dated 18th January, 1999 from Mr. Gerald Ryan to Mrs. Heffernan as follows:-

“(ii) All documentation relating to all payments from the period of incorporation to 31st December, 1994 in excess of £5,000 made by or charged to Dunnes Stores Ireland Company which had been brought to the attention of the Directors or Auditors of the Company and for which value was not received by the Company

(ii) All documentation and correspondence relating to all issues which were relevant to the delay, until 1988, by the auditors in signing the auditors' reports of Dunnes Stores Ireland Company for the years 1990/1994

(iii) All documentation relating to all transfers of monies from Dunnes Stores Ireland Company to the bank account, referred to in the report of the Tribunal of Inquiry (Dunnes Payments) as the 'Marino account' together with all documentation relating to rebates due to Dunnes Stores Ireland Company which monies were directed by Mr. Bernard Dunne into the 'Marino account' up to the end of 1994 and

(iv) Copies of the audited accounts of Dunnes Stores Ireland Company for all the years since its incorporation."

16.      The Supreme Court held that the Minister had been entitled to give the direction under Section 19 and that her decision, so far as Section 19(2)(a) was concerned, was an exercise of her powers for the purposes contemplated by the Companies Acts and within the terms of the section.

17.      Section 19 of the Companies Act, 1990 authorises the Minister in the circumstances outlined in subsection (2) to give directions to any company

"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."

18.      Section 19(4) provides:-

"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;

(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."

19.      This then brings us to the two subsections which are the subject of the constitutional challenge in the present application and which provide as follows:-

“(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 practical for him to comply with the requirement.

A statement made by a person in compliance with a requirement imposed by virtue of this section may be used in evidence against him."

20.      In the instant case the proposed examination of books and documents by the authorised officer is one to be undertaken with a view to determining whether an inspector should be appointed to conduct an investigation of the companies under the Companies Acts.

21.      There are significant differences between the position of an authorised officer and an inspector under the 1990 Act. Firstly, the appointment of an inspector is made by the Court on the application of the Minister. Secondly, Section 10 of the Act imposes a duty on all officers and agents of the company whose affairs are being investigated not merely to produce to the inspectors all books and documents of or relating to the company, but also to attend before the inspector when required to do so and otherwise "to give to the inspectors all assistance in connection with the investigation which they are reasonably able to give".

22.      An inspector may examine on oath, either by word of mouth or on written interrogatories, the officers and agents of the company and reduce the answers of any such person to writing and require him to sign them.

23.      Section 10(5) provides:-

"If any officer or agent of the company or other body corporate or any such person as is mentioned in subsection (2) refuses to produce to the inspectors any book or document which it is his duty under this section so to produce, refuses to attend before the inspectors when required to do so or refuses to answer any question which is put to him by the inspectors with respect to the affairs of the company or other body corporate as the case may be, the inspectors may certify the refusal under their hand to the Court and the Court may thereupon inquire into the case and, after hearing any witnesses who may be produced against or on behalf of the alleged offender and any statement which may be offered in defence and the Court may ... make any Order or direction if thinks fit, including a direction to the person concerned to attend or re attend before the inspector or produce particular books or documents or answer particular questions put to him by the inspector, or a direction that the person concerned need not produce a particular book or document or answer a particular question put to him by the inspector".

24.      The above quotation represents the revised form of Section 10(5) and (6) shorn of those portions found to be unconstitutional by the Supreme Court in Desmond v. Glackin and Others (1993) I.R. p.67.

25.      I have set out the relevant provisions of Section 10 as regards the position of inspectors, because the contrasting positions of persons interviewed by authorised officers and inspectors are of some considerable significance in the context of the "right to silence" which is at the heart of this case.

26.      While it is not directly relevant to the debate which took place in this case, it is perhaps pertinent and appropriate to note and recite that Section 19 of the Companies Act, 1990 was repealed and substituted by Section 29 of the Company Law Enforcement Act, 2001.

27.      Section 29(7) provides:-

"A statement made or an explanation provided by an individual in compliance with a requirement imposed by virtue of this Section may be used in evidence against him in any proceedings whatsoever (save proceedings for an offence) other than an offence under subsection (6) or (8))."

28.      Thus Section 19(6) with which the Court is concerned in the instant case has been replaced by a statutory provision which effectively "immunises" answers given to an authorised officer from use in any subsequent criminal proceedings (other than in respect of a refusal to answer or in the case of a false or misleading answer (Company Law Enforcement Act, 2001, S. 29(6) and (8)).

SUBMISSIONS OF THE PARTIES

29.      On behalf of the Applicants it is submitted that various constitutional rights of the applicants are trenched upon if the companies or their officers are obliged to provide an explanation or make a statement under Section 19(5). Mr. Gleeson for the Applicants invoked the right to remain silent, as a right corollary to the constitutional guarantee of freedom of expression conferred by Article 40.6.1 (1) of the Constitution, as identified by the Supreme Court in Heaney v. Ireland and the Attorney General (1996) 1 I.R. p.580. Additionally, he submitted, the obligation to provide information or a statement which might incriminate the maker of same in later criminal proceedings violated Article 38.1 of the Constitution which provides that "no person shall be tried on criminal charge save in due course of law". He further submitted that the considerable cost and expense to be incurred by the Applicants in complying with the extensive requirements of the authorised officer violated the Applicants property rights guaranteed by Article 40 of the Constitution.

30.      While the right to silence and the privilege against self incrimination are often bracketed together, it was submitted that the right to remain silent is akin to a right to privacy. Mr. Gleeson referred to the comment of Mustill J. in his speech in R. v. Director of Serious Fraud Officer Ex p. Smith (1993) A.C. 1 at p. 31, when he said the right is a "reflection of the common view that one person should so far as possible be entitled to tell another person to mind his own business."

31.      In Heaney, the Supreme Court preferred to base its judgment on the rights conferred by Article 40 of the Constitution (rather than Article 38) whereunder the right to silence may be seen as an aspect of the freedom of expression guarantee conferred by that article. Be it a right under Article 40 or Article 38, Mr. Gleeson accepted that the right was not an absolute one. He adopted as being an appropriate statement of the extent of permissible restriction on the right the following passage from the Judgment of Costello J. in Heaney v. Ireland (1994) 3 I.R. at p. 607 as follows:-

"In considering whether a restriction on the exercise of rights is permitted by the Constitution, the courts in this country and elsewhere have found it helpful to apply the test of proportionality, a test which contains the notions of minimal restraint on the exercise of protected rights, and of the exigencies of the common good in a democratic society. This is a test frequently adopted by the European Court of Human Rights (see, for example Times Newspapers Limited v. United Kingdom (1979) 2 EH RR 245) and has recently been formulated by the Supreme Court in Canada in the following terms. The objective of the impugned provision must be of sufficient importance to warrant overriding a constitutionally protected right. It must relate to concerns pressing and substantial in a free and democratic society. The means chosen must pass a proportionality test. They must:

(a) Be rationally connected to the objective and not be arbitrary, unfair or based on irrational considerations,

(b) Impair the right as little as possible, and

(c) Be such that their effects on rights are proportional to the objective."

32.      It was not suggested in the instant case that the rationality test had not been met. However, Section 19(5) and (6) did, it was submitted, go further than the "minimum invasion" test permitted. Compliance with the test could have been achieved by:

(a) Incorporating a similar certification procedure to Section 10 of the 1990 Act whereby a person who failed to respond to a question could be brought before the Court, and

(b) By inserting in Section 19 an explicit immunity from the subsequent use of any information given or statement made in any later criminal proceedings.

33.      Counsel referred to a number of statutes containing immunity provisions in analogous situations, including the Bankruptcy Act, 1998 (Section 21(4)), the Comptroller and Auditor General and Committees of the Houses of Oireachtas (Special Provisions) Act, 1998 (Section 5), the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act, 1997 (Section 12) and now the Company Law Enforcement Act, 2001 (Section 29). All of these legislative measures showed, it was submitted, that there was available a way of trenching less on the Applicants' rights.

34.      He further submitted that the Court should regard as persuasive the decision of the European Court of Human Rights in the case of Quinn v. Ireland, wherein the Court gave its final Judgment on the 21st day of March, 2001.

35.      This was a case brought to challenge Section 52 of The Offences Against The State Act, 1939 whereunder a suspected person arrested and detained under Section 30 of the Act could be asked to provide a full account of his movements and actions during any specified period and all information in his possession in relation to the commission or intended commission by other persons of any offence under the Act. The said section provided for the creation of an offence for non-compliance and upon conviction provided for imprisonment for a term not exceeding six months. The Act was silent on the question whether or not replies could be later used in evidence. While noting the uncertainty about the domestic legal position in Ireland in July, 1996 on the question of the direct or indirect use in later proceedings of statements made pursuant to Section 52, the Court while not adjudicating on that issue, nonetheless found that the "degree of compulsion" imposed on the applicant by the application of Section 52 with a view to compelling him to provide information relating to charges against him under the Act, in effect "destroyed the very essence of his privilege against self incrimination and his right to remain silent." ...At p. 16 of the Judgment). In other words, it failed the proportionality test. Mr. Gleeson submitted that, given the imminence of Irish legislation adopting the Convention, the decision should be seen at least as strong persuasive authority in his favour.

36.      Reliance was also placed on the decision of the Constitutional Court of South Africa in Ferreira v. Levin and Others 1996 (1) BCLR 1 (CC) where that Court had to consider the constitutionality of Section 417(2)(b) of the Companies Act, 1973 which provides that any person summoned for an examination into the affairs of the company "may be required to answer any question put to him at the examination, notwithstanding that the answer might tend to incriminate him, and any answer given to such question may thereafter be used in evidence against him." Having listed all sorts of reasons why it might be necessary to compel persons to answer all relevant questions put to them (even when the answers might incriminate them), the Court nonetheless asked whether the section was necessary in the sense that no other method existed which could achieve the desired object, but which was less intrusive of the examinee's right against self incrimination. The Court concluded that the objective could be fully achieved if an immunity was conferred on an examinee in respect of the use of his evidence at any subsequent criminal trial. This section was accordingly declared invalid to the extent of such inconsistency. The Constitutional Court affirmed this decision in Parbhoo and Others v. Getz NO and Another 1997 (10) BCLR 1337 (CC).

37.      Finally, in relation to the issue of property rights, it was submitted that to comply with the requirements of the authorised officer, inquiries of an extensive nature would require to be undertaken at the companies expense. Given that under Section 10 of the Companies Act, 1990, the Court could be involved in determining questions of compliance or non-compliance, it followed that situations could arise whereby a company investigated under Section 10 could apply to the Court for costs. Absent any Court involvement in Section 19 inquiries no such remedy existed for the protection of a company whose affairs were under investigation under that section. In this regard the Applicants relied on Inspector of Taxes v. Arida Limited (1996) 1 I.L.R.M. p. 74 in which a case was stated for the determination of the High Court as to whether a Judge of the Circuit Court sitting to hear an appeal from the Appeal Commissioners pursuant to Section 429 of the Income Tax Act, 1967 had any jurisdiction to award costs there being no explicit provision in the Act so providing. The question of law was answered in the affirmative, and confirmed by the Supreme Court. Accordingly, it was submitted, that even without any specific provision in Section 10 enabling the Court to award costs, it followed from the cited authority that such a jurisdiction did exist when the Court was involved in the statutory process.

38.      In reply, Mr. Collins argued that in considering the 'right to silence' one must commence by examining which particular constitutional right is invoked or alleged to have been breached. For example, there was a difference between a right of silence and right against self incrimination, just as there was a distinction between a suspect who invokes the right of silence and the right of an accused in the course of a trial to invoke such rights, a distinction which had been noted by Costello J. in Heaney v. Ireland and The Attorney General .

39.      In essence, the present case was, by analogy, governed by the decision of the Supreme Court in National Irish Bank (1) (1999) 3 IR 145. In that case, Section 10 of the Companies Act, 1990 had passed the proportionality test, the Supreme Court holding that if there were grounds for believing there was malpractice or illegality in the operation of the banking system, it was essential, in the public interest, that the public authorities had the power to investigate the matter fully. The Supreme Court had further held that the powers given to inspectors under Section 10 of the Act of 1990 were no greater than those which the public interest required. The Supreme Court had found that interviewees were not entitled to refuse to answer questions properly posed to them by the inspectors.

40.      In terms of the objective sought to be achieved by the statutory provision under challenge there was no true basis for comparison between Section 19 and Section 52 of The Offences Against The State Act, 1939. The objective under companies legislation was to supervise companies who enjoy the privileges of incorporation. By electing for incorporation, obligations were assumed, including obligations to file accounts, list shareholdings, and directorships and to voluntarily submit to the corporate regime laid down in the companies legislation. This case was also one under Part II of the Companies Act, 1990. There was a rational connection between the means chosen and the objective sought to be attained. The Supreme Court in Heaney had not specifically adopted the four criteria set out by Costello J. in the High Court in that case. Proportionality was the critical consideration governing the Supreme Courts conclusion.

41.      Insofar as "immunisation" is concerned, answers given which are involuntary, cannot be later used in any subsequent criminal proceedings. There had been no statutory exclusion from future use in criminal proceedings of information furnished under either Section 10 or Section 19. However, the Supreme Court had declared Section 10 to be constitutional and, by a parity of reasoning, precisely the same considerations applied to Section 19: that is to say, existing law in any event rules out the use of involuntary statements in later criminal proceedings.

42.      To say that there were problems revolving around the question of "involuntariness" was somewhat unreal, because even the act of warning a suspect of a penal sanction rendered answers inadmissible. As Pringle J. had pointed out in A.G. v. Gilbert (1973) I.R. 383 (at p. 387):-

"As in the present case the statement of request was made after the Sergeant had stated that a failure or refusal to answer would constitute an offence involving serious penalties, in our opinion it could not be said in any sense to be a voluntary statement and so the trial judge should not have admitted it in evidence ..."

43.      The decision of the European Court of Human Rights in Quinn v. Ireland should be seen as having limited relevance. That case was concerned with the state of Irish Law as of 1996, prior to the decision of the Supreme Court in the case of National Irish Bank (1). It was concerned with the case of a "suspect" who had been arrested and detained in relation to a criminal offence under The Offences Against The State Act, 1939. The European Court had been careful to exclude from the ambit of its judgment material which had an existence independent of the will of the suspect such as documents or blood samples. (Par 40 of Judgment). The Court had expressly resiled from adjudicating on the issue of the later use of admissions. The essential issue in the case was the possible overthrow of a detainees will in particular circumstances which were radically different from those in the present case.

44.      Insofar as any suggested breach of the Applicants' property rights under the Constitution was concerned, the simple response was that an inquiry conducted by an authorised officer is an inquiry into the affairs of companies and is a consequence of the privilege of incorporation to which the company had submitted. Once an inquiry was initiated for bona fides reasons, there could be no objection, notwithstanding inconvenience and expense attendant upon such compliance.

45.      The present inquiry had been brought about largely by the acts of the Applicant companies themselves, who, in the words of Keane C.J. in the judgment already referred to, had made various payments which "could not be regarded as having any conceivable legal justification" (p. 33)

46.      There are many examples, Mr. Collins submitted, of persons, corporate or otherwise, who are subject to some form of state inquiry at cost to themselves where there is no mechanism to recover such costs. Examples include:-

(a) Revenue audits,

Inspections by health and safety authorities,

Audits of Solicitors practices by the Law Society,

Requests to and into private companies under the Date Protection Act.

47.      The Applicants had sought to argue that in some way there was a facility to apply for costs in the context of a Section 10 inspection, but not in a Section 19 inquiry. The argument was premised on the proposition that if one engineers a refusal to comply with some request of the inspector, then because the inspector will certify the refusal and bring the matter before the Court under Section 10(5), the Court could then use this occasion to give the company the costs of complying with the investigation. However, against whom could any such Order be made?

48.      Mr. Collins submitted there was no support for such an interpretation in the wording of the Act in any shape or form. Inspector of Taxes v. Arida Limited was an authority only for the proposition that when a Judge of the Circuit Court sits to hear an appeal from the Appeals Commissioners and is given by statute the same powers and authorities as the Appeals Commissioners, the rules of the Circuit Court continue to apply to such an appeal because there was no indication in the legislation that the rules of the Circuit Court were to be disapplied. The substantive argument in that case concerned the power of the Judge to award costs and since the Circuit Court rules applied, it was held that he did have the power to award costs. There was no credible analogy between that case and the proposition that when an inspector certifies a refusal to comply with the request for information of the Court, the Court thereby becomes invested with the power not just to award the costs of some set of legal proceedings but the costs of the investigation as a whole against some unspecified and faultless party.

49.      In reply, Mr. Nesbitt on behalf of the Applicants argued there was a clear distinction between the decision of N.I.B. (1) and the instant case, not least because the consequence for a person for non-compliance under Section 10(5) is, at worst, to be forced to answer only at a stage where he has been brought before a Court which must then investigate any certified refusal and which may or may not do anything after a full consideration of all material matters and a full hearing. Section 19(5) on the other hand operates quite differently. It deems the refusal to explain or answer an offence per se, being one which attracts a fine and perhaps imprisonment. In a Section 19(5) deemed offence, the party is convicted by his refusal.

50.      Under Section 10(5) a person being questioned is afforded statutory protection from being summarily compelled to answer; he may be found to have reasonably refused. In this way the impairment of the right to silence/privilege against self incrimination is reduced in a real and substantial way not afforded under Section 19(5).

51.      Mr. Nesbitt pointed out what he described as the "road map" dilemma left unresolved in N.I.B. where answers given are self-incriminatory. An answer can give a "road map" whereby a conviction can be secured without any statement made necessarily being proffered as evidence. Take for example the statement: "I murdered my wife, the bloodstained knife with my fingerprints on it is buried next door." Digging up the knife, matching the blood and fingerprints will likely carry a conviction

52.      In essence, the impairment of rights effected under Section 19 goes substantially beyond the level of impairment wrought by Section 10. That consideration alone not merely distinguished the instant case from N.I.B. (1) but also carried the constitutional argument in the Applicant's favour.

THE RIGHT TO SILENCE

53.      The right to silence does not denote any single right, but rather, in the words of Lord Mustill in R -v- Director of the Serious Fraud Office ex-parte Smith (1993) AC 1 it "refers to a disparate group of immunities which differ in nature, origin, incidence and importance".

54.      Lord Mustill in that case took time (at p. 30) to consider various types of immunity embraced by the term and said:-

"Amongst these may be identified:

(1) a general immunity, possessed by all person and bodies, from being compelled on pain of punishment to answer questions posed by other persons and bodies

(2) a general immunity, possessed by all persons and bodies, from being compelled on pain of punishment to answer questions the answers to which may incriminate them

(3) a specific immunity, possessed by all persons under suspicion of criminal responsibility whilst being interviewed by police officers or others in similar positions of authority, from being compelled on pain of punishment to answer questions of any kind

(4) a specific immunity possessed by accused persons undergoing trial, from being compelled to give evidence and from being compelled to answer questions put to them in the dock

(5) a specific immunity, possessed by persons who have been charged with a criminal offence, from having questions material to the offence addressed to them by police officers or persons in a similar position of authority

(6) a specific immunity (at least in certain circumstances which are unnecessary to explore) possessed by accused persons undergoing trial, from having adverse comment made on any failure

(a) to answer questions before trial, or

(b) to give evidence at the trial".

55.      He then pointed out that each of these immunities was of great importance but that they were not all different ways of expressing the same principle. It was necessary, he said, to "keep distinct the motives which have caused them to be embodied in English Law; otherwise objections to the curtailment of one immunity may draw a spurious reinforcement from association with another, and different, immunities commonly grouped under the title of the 'right to silence'."

56.      Having referred to the various forms of immunity identified by Lord Mustill, Costello J. in Heaney -v- Ireland stated as follows at p. 602:-

"Looking at the various motives for the different immunities he had identified he pointed out that the first was a simple reflection of the common view that one person should so far as possible be entitled to tell another person to mind his own business, which was an assertion of personal liberty and privacy but that "few would dispute that some curtailment at the liberty is indispensable to the stability of society".

57.      He then pointed out that there was a long history of reaction against abuses of judicial interrogation and so the immunity against judicial interrogation arose. He further pointed out that there was an instinct that it is contrary to fair play to put an accused in a position where if he answers questions he may condemn himself and if he refuses he may be punished for his refusal. And finally, he pointed to the desire to minimise the risk that an accused will be convicted on the strength of an untrue extra judicial confession to which the law gives effect by refusing to admit confessions in evidence except upon proof that they are "voluntary". He quoted Lord Mustill's conclusion as follows, at p. 602:

"In the circumstance I think it is clear, given the diversity of immunities and of the policies underlying them, that it is not enough to ask simply whether parliament can intend to abolish a long-standing right to silence. Rather, an essential starting point must be to identify what variety of this right is being invoked, and what are the reasons for believing that the right in question ought at all costs to be maintained"."

58.      In every case therefore the issue with which the Court is concerned is not to debate an invasion of rights in abstract but rather infringements of rights at a particular time and in a concrete factual setting.

59.      The list of immunities recorded by Lord Mustill indicates a hierarchy of different situations in which the requirement not to infringe the right has a greater or lesser degree of importance. As stated by Sachs J. in Ferreira -v- Levin and Ors. (at p. 272):-

"In my view, a breach of the long-standing right not to be compelled to incriminate oneself out of one's own mouth would, in any context, raise a question of fundamental freedom. At the same time, the absence of an explicitly stated generalised right against self-incrimination in the Constitution, indicates that the operation of the principle outside of

a trial situation is weaker that within. The privilege against self incrimination should therefore neither be reduced to a restricted immunity confined to the trial situation, nor be enlarged so as to become an absolute right to be used on all occasions. It's application depends on time, place and context. The closer to a trial situation, the more powerful the principle; the more remote from a trial, the weaker it will be."

60.      In the instant case, there is no suggestion of a 'trial', nor is there any 'suspect' who may have been arrested and detained as occurred in the Heaney case. The incident case is at the lower end of the spectrum or hierarchy identified by Lord Mustill.

61.      Furthermore, the narrow objective of Section 19 is to obtain sight of books and documents with a view to seeing if an inspector should be sent in to examine the company's affairs under another section. It follows therefore that the Court must also take into account that where the incriminating material has an objective reality, the requirement for protection is less compelling.

62.      As Sachs J., again in Ferreira, stated at (p. 274):-

"Similarly, the more that self incrimination takes the form of oral communication, the more compelling will the protection be; the more objective or real the existence of the incriminating material, on the other hand, the more attenuated. Accordingly, pre-trial procedures of a non-communicative or non testimonial kind, such as compulsory fingerprinting, blood tests, blood alcohol tests, attendance at identity parades, DNA and other tests of an objective nature, or, in company fraud matters, hand writing tests, all of which would seem to fall directly under the concept of freedom and personal security, have become well established processes regarded in many parts of the world as being consistent with the values of an open and democratic society based on freedom and equality, and in suitably controlled conditions, would have far less difficulties in passing Section 33 scrutiny in terms of our Constitution".

63.      This consideration was also acknowledged by the European Court of Human Rights in the Quinn case, where the Court stated (at p. 12):-

"The right not to incriminate oneself is primarily concerned, however, with respecting the will of an accused person to remain silent. The Court would note, in this context, that the present case does not concern a request, through the use of compulsory powers, of material which had an existence independent of the will of the applicants such as, documents or blood samples".

64.      These narrow objectives must in turn be seen in context against the wider policy objectives of Part II of the Companies Act 1990. The public interest in good company governance can hardly be questioned. Shanley J. in National Irish Bank (1) identified the State's objective under Part II of the Companies Act 1990 when he stated as follows (at p 165):-

"Part II of the Act of 1990 as stated provides an mechanism for the investigation of companies by inspectors. The scheme of the Act of 1990 allows the appointment of inspectors by the Court on the application of the Minister where there are circumstances which suggest to the Court that the company has been operated in an unlawful or fraudulent manner. The inspectors are given investigative powers including a power to compel answers from officers and other persons. It is clearly envisaged by the Act of 1990 that prosecutions can follow. Speaking at the statutory policy behind the corresponding provisions of the English Act of 1985, Scott J. said In re: London United Investments Plc. (1992) B.C.L.C. 91 at p. 113:-

It is a regrettable feature of commercial and corporate fraud in these modern times that facilities are available for sophisticated fraudsters to prevent the trail leading to the unravelling of the fraud from being followed up. The secrecy provisions of some countries corporate and banking laws operate to this effect. Normally shareholdings and offshore companies do so as well. There is often no alternative if frauds and dishonest stratagems are to be laid bare but to demand answers from those who are in a position to give them. This, in my opinion, is at least part of the statutory policy being Part XIV of the Companies Act 1985.

It is, of course, a legitimate objective of the State, and entirely in the public interest come to lay bare frauds and dishonest strategems, and where the only means of effectively achieving such an objective is to provide an investigative procedure without a right to silence (as in the instance case) then one can properly assert that the restrictions imposed by Section 10 on the right to silence are no greater than is necessary to enable the State to fulfil its constitutional obligations of ensuring equality before the law and of protecting the property rights of every citizen."

65.      In the Supreme Court (p. 180) Barrington J stated:-

"...if there are grounds for believing that there is malpractice or illegality in the operation of the banking system, it is essential, in the public interest, that the public authorities should have power to find out what is going on. It appears to me that the powers given to the inspectors under Section 10 of the Companies Act 1990, as set out earlier in this judgment, are no greater than the public interest requires. Their meaning is clear and they pass the proportionality test. Accordingly, it appears to me than interviewees are not entitled to refuse to answer questions properly posed to them by the inspectors pursuant to the inspector's powers under the Act."

66.      At an earlier point in his judgment, Barrington J. had observed that the investigation of commercial fraud was "a matter of great importance in modern society".

67.      Those who enjoy the benefits of incorporation must also, it seems to me, accept the concomitant duties and obligations of incorporation, as detailed by Mr. Collins. As Herbert J. (while sitting as a member of the Supreme Court for the hearing of the appeal in this matter on the 1st day of February 2002) stated (at p.3):-

"Incorporation under the Companies Acts involves accepting the overseeing power of the Minister. Persons who bind themselves together to constitute the legal entity known as the "Company" cannot choose to enjoy the manifold privileges and benefits of incorporation while rejecting the less convenient aspects, such as the supervisory role of the Minister. It is for the more effective discharge of this function that the Oireachtas saw fit to confirm on the Minister the right to examine the books or documents of the bodies in the circumstances specified in Section 19 (2)(a) to 19 (2)(h). In my judgment, the nature of the power conferred upon the Minister by Section 19 (2)(a) is intentionally expressed in wide and general terms relating as it does to a form of preliminary inquiry, in contrast to the very specific occasions for such intervention by the Minster instanced in subsections 19 (2)(b) to 19 (2)(h)."

68.      Taking all these considerations into account, I am satisfied that Section 19 (5) does not fail the proportionality test indicated by the Supreme Court in Heaney. The compulsion to produce books and documents is completely unobjectionable and the requirement to answer questions of a fairly limited nature under Section 19 does not in my view constitute an infringement of Article 40 of sufficient substance to warrant condemning the section when weighed in the balance with the countervailing public interest in good corporate governance.

69.      There is at the end of the day a world of difference between the position of a vulnerable suspect, held in police custody, say, for example, for the investigation of a domestic homicide and that of a large corporation which may engage in all sorts of stratagems and then call on vast financial resources and expertise to protect and defend its position to the ultimate I am not here referring to the present Applicants, but rather contrasting by example the hugely different contexts in which the right to silence must be considered.

70.      The real difficulty, it seems to me, lies in Section 19 (6). The examinee is obliged, on pain of punishment for a refusal, to answer questions or provide explanations which may be incriminating and which may be used in subsequent criminal proceedings against him.

71.      While the compulsion to answer questions dealing with the stewardship of a company, whether incriminating or not, can be justified with relative ease, the knowledge that the answers can be used in subsequent criminal proceedings gives rise to a second problem which is related inextricably with the issue just considered (i.e. the permissible questioning), when considering the whole question of "voluntariness".

72.      It is instructive to see how Shanley J. dealt with this difficulty in National Irish Bank when considering the constitutional issue under Section 10. In essence, he approached the problem by divorcing the issue before him from the issue of what might happen with material yielded up and sought to be used at a later stage. At p. 166 he stated:-

"I do not believe that in determining that Section 10 abrogates the right to silence, I should have regard to the use to which such answers are put. The statutory obligation to answer self-incriminatory questions is not inconsistent with the right to trial in due course of law. When asked questions by an inspector, the witness does not stand as an accused person. If he becomes an accused person, having answered incriminating questions, his right to a fair trial may not even at that stage be infringed; it depends on whether the compelled testimony is tendered against him at his trial. If it is, he may, of course, object to it and it would be matter for the trial judge to determine its admissibility. It is at that stage, and no sooner, that an adjudication on the admissibility of answers (or the fruits of such answers) is to be made. I therefore see no necessary connection between the occasion of questioning by an inspector and the occasion, at trial, of tendering compelled testimony. No right to a fair trial is infringed at the questioning stage; the use to which the answer are put is a separate matter and where such use threatens to or does infringe a constitutional right of the witness, that right can be then asserted and vindicated. That it is appropriate to look at the Inspector's investigative and questioning roles separately from any subsequent trial finds support in the decision already referred to in Saunders -v- United Kingdom) (1997) 23 EHRR 313, where (in relation to the Companies Act, 1985 in the United Kingdom) the European Court of European Rights said of the equivalent of section 10 at p. 337:-

'... a requirement that such a preparatory investigation should be subject to the guarantees of a judicial procedure as set forth in Article 6 (1) would in practice unduly hamper the effective regulation in the public interest of complex financial and commercial activities.'

Accordingly, the Court allowed that the privilege against self-incrimination was not applicable to such preparatory investigations. However, the Court found that the use of such compelled testimony at the trial was indeed a breach of Article 6 (1) of the Convention . Equally, in Heaney -v- Ireland (1996) 1 IR 580 the Supreme Court upheld the constitutionality of Section 52 (1) of the Offences Against the State Act, 1939, and declined to consider the moot point of whether information lawfully obtained pursuant to Section 52 could be used in evidence. The position is no different here: whether or not there is a constitutional right not to have compelled testimony, or its fruits, used against an accused is an issue which I do not now have to decide because it has not as yet arisen. That is a matter that falls to be decided on the occasion when such evidence is tendered. Accordingly, I do not have to consider the implications of the wording of Section 18 of the Act of 1990."

73.      In the Supreme Court it was held that any confession of an official of a company under investigation obtained by the inspectors would not in general be admissible at a subsequent criminal trial of such an official unless the trial judge was satisfied that the confession was voluntary. At p. 188 Barrington J. stated:-

"Accordingly the better interpretation of Section 18 in the light of the Constitution is that it does not authorise the admission of forced or involuntary confessions against an accused person in a criminal trial, and it can be stated, as a general principle, that a confession, to be admissible at a criminal trial, must be voluntary. Whether however a confession is voluntary or not must in every case in which the matter is disputed be a question to be decided, in the first instance, by the trial judge."

74.      This approach essentially "parks" any issue as to later use or admissibility raised under Section 10, leaving it to be dealt with on a case by case basis. This approach inevitably means that the user or admissibility of incriminatory material is not determined by any objective standard but remains an essentially subjective test going to whether the will of the witness was overborne in the particular circumstances. It would appear to displace the objective test of self-incrimination at common law.

75.      It leaves outstanding the dilemma identified by Kirby P in Accident Insurance Mutual Holdings Limited -v- McFadden (1993) 31 NSWLR 412:-

"What is in issue, ultimately, is not the subjective fears of the witness claiming the privilege but the objective tendency of the question to expose that witness to the risk of criminal prosecution. One witness may not perceive such a risk. Unless the judicial officer presiding intervenes, the question will be answered and the privilege lost. One witness may have multiple motives and even mala fides. But if the question is such in fact as to expose him or her to the risk of future prosecution, it is the duty of the judicial officer to uphold the privilege. It will be easier and more reliable to assess the reasonableness of the apprehension than the genuineness of the sentiment. A Court can quite readily speculate upon and judge the possible use of demanded oral testimony. The devil himself knoweth not the mind of man (or woman)."

76.      However, regardless of the difficulties which the subjective test, to be applied on a case by cases basis, may entail, this Court is of course bound to accept and apply the principles enunciated by the Supreme Court in National Irish Bank, unless Section 10 and Section 19 are clearly distinguishable in the sense that the right to silence is more comprehensively invaded under Section 19 than under Section 10.

77.      It is implicit in the judgment of Barrington J. that there is scope for answers to be given on a voluntary basis under Section 10. If not, it would have been quite pointless to resolve the issue in the manner in which it was resolved by the Court.

78.      Under Section 10, a person who is unwilling or refuses to answer still has the opportunity of having the reasonableness of that stance tested as an issue by the Court. This is an important protection, because it is scarcely to be anticipated that the Court will direct that unreasonable or arguably irrelevant questions be answered. A refusal may thus not be an offence.

79.      The interviewee under Section 19 has no such scope for dissent. Either he answers or he does not. If he does not answer, all the elements of the offence exist and, while obviously an adjudicative element must then take place prior to conviction, it would appear that any judge dealing with the matter would not be concerned to enquire further than to ascertain whether a particular question was put and no answer given before reaching a conclusion, which would almost certainly be to convict, so that the real issue will always be the appropriate level of sanction to be imposed.

80.      Can it be said that there is any scope for "voluntariness" with regard to the answering of questions in this framework? In my view there is not. A refusal seems to me to be akin to a refusal to provide a blood or urine sample when required so to do by a properly designated medical officer in the context of a drink driving offence. Furthermore, the fact that any answer given may be used in later proceedings can only constitute a further pressure on the interviewee to keep silent, so that his only 'choice' is between a conviction on refusal, and self-incrimination in the context of a later prosecution on making answer.

81.      One assumes that an authorised officer may warn an interviewee who fails to explain or make a statement that he is thereby committing an offence. That being so (it being even more objectionable that the interviewee would not know that an offence is about to be committed), the circumstances of any statement then made must be regarded as not dissimilar from those found to be unsatisfactory by the Court of Criminal Appeal in A.G. v. Gilbert (1973) I.R. 383.

82.      It seems to me there can be no scope for voluntariness under Section 19 given that the consequence of a refusal to answer is the immediate commission of an offence with penal sanctions attaching. It seems to me therefore that the instant case is clearly distinguishable from the decision of the Supreme Court in National Irish Bank (1).

83.      This being so, I do not think that one can approach resolution of the matter in the separate stages as envisaged by Shanley J., other than to the extent of acknowledging or holding that different constitutional considerations appear to arise under Section 19(5) and 19(6). Article 40 governs Section 19(5) whereas both Article 40 and Article 38, it seems to me, govern Section 19(6). Where no scope for voluntariness exists under Section 19 so that any answers given are inescapably inadmissible in later criminal proceedings, there can be no justification for considering the two questions as though they were separate and distinct. They feed into each other in all critical respects.

84.      The decision of the European Court of Human Rights is clearly distinguishable from this case, quite apart from its non-binding nature. The Court in Quinn specifically stated (at par. 55) that it was not "called upon in the present case to consider the impact on the rights to silence or against self incrimination of the direct or indirect use made in later proceedings against an accused, of statements made pursuant to Section 52 of the 1939 Act."

85.      Instead, the Court found that the "degree of compulsion" under Section 52 was not a proportionate response in that the security and public order concerns of the Government could not justify a provision which extinguished the very essence of the applicants' right to silence and against self incrimination. That case may be further distinguished insofar as it relates exclusively to the overthrow of a suspect's will, in particular circumstances of detention following arrest. The Court carefully distinguished between those situations and situations where documents or objective evidence was involved. It is also important to note that the European Court of Human Rights in Saunders v. The United Kingdom decided to condemn the use at trial of evidence obtained from the accused under compulsion, but not the means by which that evidence was initially obtained.

86.      I find that Section 19(6) by not immunising answers given from later use in criminal proceedings (and to that extent only) infringes the "minimum invasion" test enunciated by Costello J. in Heaney v. Ireland . I am somewhat fortified in reaching this conclusion by the knowledge that the new amending legislation has provided for just such an "immunisation" clause, although I could not and have not allowed that determine my own views on the matter which I have arrived at for the reasons stated.

87.      I accept all of Mr. Collins submissions in relation to the alleged infringement of property rights under the Constitution. The Minister has a duty and responsibility to ensure sound corporate governance and the propriety of her decision to appoint an authorised officer has been upheld in earlier proceedings in this matter. Furthermore, the Supreme Court has alluded to certain findings of fact which precipitated the present inquiry which were held by that Court to provide adequate grounds for the inquiries brought under Section 19. There is no question of mala fides of any sort, which strikes me as the only possible motivation which might give rise to any question of the Applicants seeking relief in respect of costs or expenses incurred in complying with the Minister's requirements as detailed in the statutory regime. That inquiry is in every respect similar to the other instances cited by Mr. Collins, such as a Revenue audit, and once the bona fide nature of such an inquiry is established, it seems to me that no contention lies that property rights have been infringed when the countervailing public interest in good corporate governance is placed in the balance. I accordingly reject all the Applicants submissions on this point.

88.      It follows from the findings I have made that all demands and requirements made under Section 19 (4) were made on a lawful and constitutional basis. I reject the Applicants submissions in relation to Section 19 (5). I do not accept that Section 19(5) infringes either Article 40 or Article 38 of the Constitution. However, it equally follows that Section 19(6) cannot survive constitutional scrutiny for the reasons stated. I will accordingly declare Section 19(6) only to be unconstitutional.