Court Inspectors
Cases
Dunnes Stores Ireland Company v. Ryan
[2002] IESC 7
THE SUPREME COURT Keane C.J.
“Conclusions
89. The condition identified in paragraph (a) of subsection 2 of section 19 differs from the conditions referred to in any of the other subparagraphs of that subsection. Paragraph (a) does not refer to any suspected wrongdoing, whether criminal or civil, but to the necessity 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 Act 1963-1990.
90. The reasons given by the Minister for the exercise of her power under paragraph (a) ought to be considered together. I do not think it can be accurately said that the Minister relied simply on a general concern for breaches of standards of corporate governance.
91. As has been seen the reasons which the Minister has given for relying on that provision refer to substantial breaches of standards of corporate governance by reference to specific circumstances arising out of findings made by McCracken, J. and Buchanan, J. in the inquiries conducted by them. Those specific circumstances include the making of substantial payments in a manner so as to assist a third party to evade income tax liability, the disbursement of various substantial funds of the company by a director of the company to the benefit of Third Parties, most of whom could not be identified, with no evidence of any benefit having been obtained by the Dunnes Stores Group and the failure of the company to keep proper books of accounts which made it impossible for most of the beneficiaries of the funds dispersed to be traced. Those matters are referred to in the reasons given by the Minister for relying on Section 19(2)(a) by reference to the circumstances which are outlined in relation to the other paragraphs of Section 19(2) referred to in the schedule of reasons.
92. In my view the nature of the power conferred upon the Minister by subsection 2(a) of Section 19 is deliberately expressed in wide and general terms, relating as it does to a form of preliminary inquiry which would enable the Minister to best determine whether there are sufficient grounds for the appointment of an Inspector to conduct an investigation of the company in question. This contrasts to the very specific occasions for such intervention by the Minister instanced in Subsections 2(b) to (h).
93. It seems to me that the phrase “standards of corporate governance” in its ordinary and natural meaning refers to the standards according to which the affairs and business of the company are conducted by reference to the obligations and standards imposed upon them by law as well as the Memorandum and Articles of Association. (‘ governance: the action or manner of governing: conduct of business behaviour .’ New Shorter Oxford Dictionary).
94. The very nature of public regulation of Companies, such as that found in the Companies Acts (as well as other legislation) is to ensure and reinforce certain standards of governance of corporate bodies. As a matter of policy companies may look to generally accepted “best practice” criteria in the conduct of their affairs.
95. The O.E.C.D. Principles of Corporate Governance (SG-CG (99) 5) acknowledges in its preamble that “ the Corporate Governance framework also depends on legal, regulatory, and institutional environments .” The World Bank report on Corporate Governance (published September 1999) acknowledges that “ in its narrowest sense , (emphasis added) corporate governance can be viewed as a set of arrangements internal to the corporation that define the relationships between managers and shareholders .” but even, “ these arrangements may be embedded in Company Law, Securities Law, listing requirements, and the like …” That report also acknowledged that external rules have a direct effect on corporate governance including “… the legal machinery for enforcing shareholders rights, systems for accounting and auditing, a well regulated financial system, …”
96. In any case, apart from the foregoing citations, any ordinary and reasonable interpretation of the notion of standards of corporate governance relates to the manner in which a corporate body’s officers govern the corporation and must in my view include compliance by companies and directors with any regulatory regime, such as the Companies Acts, governing the conduct of their affairs.
97. I think it can be said that corporate governance has an internal and external dimension. It is only in its narrowest sense that corporate governance can be viewed as a set of arrangements internal to the corporation that define relationships between managers and shareholders. Such internal arrangements may, as was submitted, be governed by the Memorandum and Articles of Association and companies may choose to follow certain “best practice” criteria. The error, as I see it, in the submissions of the Applicants/Respondents is to confine their perception of corporate governance to such an internal dimension. The external dimension comprises those standards or obligations laid down by external sources such as statutes or statutory regulations.
98. While the Companies Acts generally include provisions relating to the incorporation, registration and structure of companies as well as such matters as duties of directors towards their members, they also govern fundamental aspects of the relationship between companies and the rest of society. The advantages of trading or conducting business through a corporate entity, such as a company with limited liability, are self-evident. Companies have a legal personality separate and distinct from its individual members. Many aspects of how they conduct their affairs as distinct entities are regulated by law in the public interest. The Companies Acts are the primary source of that regulatory regime even though there are other statutes which may regulate how a company or its directors conduct its affairs such as the Competition Acts, certain provisions of the Finance Acts or the Central Bank Acts. Statutory measures specifically directed at companies, in particular the Companies Acts, define, inter alia , obligations specific to companies and their directors with which they are bound to comply in the public interest. They set standards for corporate governance.
99. It is not in issue that the Minister has a role under the Companies Acts in supervising compliance by companies with such statutory provisions governing, inter alia, the conduct of their affairs. Summary proceeding in relation to an offence under the Acts may be prosecuted by the Minister. As regards the Companies Acts, 1990, the Minister may apply to the court, pursuant to section 8, for the appointment of an inspector to investigate the affairs of a company and to report thereon. She may appoint an inspector to investigate and report on the membership or ownership of a company pursuant to section 14 of that Act. In addition to her powers under Section 19, the focal point of these proceedings, the Minister also has certain powers to investigate share dealings of a company pursuant to Section 66.
100. Thus the Oireachtas has conferred on the Minister, as the member of Government responsible for the Department of Enterprise, Trade and Employment, significant powers to ensure, inter alia , that companies who have availed of the right to incorporate and register under the Acts and the advantages which such incorporation confers, do not abuse those advantages to the detriment of their shareholders, creditors and, in particular, the public interest. I do not think the statutory duties and obligation imposed on companies and directors can be viewed simply as an end in themselves for their benefit since those duties have a function in preventing abuses of their corporate status which may lead to consequences which are not just breaches of the Companies Acts per se, but may have other far reaching consequences of public interest. Therefore, I do not think the concerns of the minister in exercising her supervisory role pursuant to the Acts can be said to be limited to simply whether a particular company has breached a particular provision of the Companies Acts at a particular point in time. The Minister must also be concerned with the damage which such breaches have on public confidence in how companies conduct their affairs particularly where such breaches may be extensive and have a potential consequence of undermining confidence in corporate status and its governance.
101. In this sense one of the purposes of the Companies Acts is to confer on the minister a responsibility to be concerned with and oversee the standards of corporate governance in companies as laid down or reinforced by those Acts.
102. Accordingly, I have come to the conclusion that breaches of standards of corporate governance as laid down or reinforced by the Acts may be taken into account by the Minister when considering whether to exercise her powers under Section 19(2)(a). An expression of general concern with breaches of such standards would not constitute a sufficient statement of her reasons for exercising her power under that paragraph. As I have already pointed out the Minister relates her concern to specific circumstances of abuse and misfeasance disclosed by the reports of McCracken, J. and Buchanan, J. The reasons given are sufficient to disclose a reasonable and rational basis for the Minister’s decision pursuant to paragraph (a)
103. One cannot loose sight of the fact that the whole purpose and object of paragraph (a) is to enable the Minister to decide whether she has sufficient grounds to proceed with an application for the appointment of an Inspector pursuant to Section 8(1), (a), (b) or (c) of the Act. The abuses disclosed by the two reports and relied upon by the Minister are clearly relevant to the grounds upon which a Court might be asked to make an appointment pursuant to Section 8(1).
104. I have come to the conclusion, therefore, that the reasons stated by the Minister for the appointment of an Inspector pursuant to Section 19(2)(a) come within the terms of paragraph (a) and she was entitled to rely upon them.
“Necessary”
105. Much argument was directed to the use of the word “necessary” in subparagraph (a). It was contended on behalf of Dunnes that it was not “necessary” to examine any of the books or documents of Dunnes in the circumstances which exist in the present case. Clearly paragraph (a) anticipates an application by the Minister under s.8 of the 1990 Act for the appointment by the Court of an inspector in the exercise of the discretion which the Court would possess in the event of the Court being satisfied as to the existence of any of the circumstances identified in paragraphs (a) – (c) of subsection 1 of section 8 aforesaid. That being the case the word “necessary” clearly relates to the requirement that the Minister should satisfy herself that appropriate circumstances exist in which to make such an application and the Court being provided with appropriate information to prove, first, compliance with the statutory conditions and, secondly, adequate information on which to base the exercise of the discretion conferred upon it in relation to such an appointment. The word “necessary” could not be read as an absolute condition precedent to the making of an application to the Court for the appointment of an inspector, but the practical necessity of obtaining sufficient information to justify the decisions which would be involved in making an application to the Court which could have damaging effects for the company in respect of which the application was made. Where, as in the present case, it is established that serious abuses took place in the past I can readily see the necessity of examining certain books and records to ensure that the position has been fully rectified and not repeated and that there are reasonable grounds for assuming that there would be no further recurrence.
Decision
106. Having regard to the nature and extent of the abuses relied upon by the Minister in the reasons which she gave, it has not been established that the appointment of the authorised officer on Section 19(2)(a) was either irrational or disproportionate.
107. Having regard also to my earlier conclusions, I am satisfied that the Minister’s decision, so far as Section 19(2)(a) is concerned, was an exercise of her powers for purposes contemplated by the Companies Acts and within the terms of the section.
108. Accordingly I would allow the appeal on this ground.
Director of Corporate Enforcement -v- DCC plc & Ors
[2008] IEHC 260
Kelly J.
“Discretion
It would be unwise to attempt to set out an exhaustive list of the factors which the court would be justified in taking into account in exercising the discretion conferred upon it by s. 8. It is not possible to anticipate particular facts or circumstances which may present themselves in future cases. However I am of the view that the following matters are appropriate to be taken into account in the exercise of the courts discretion. Needless to say these only arise for consideration in circumstances where the two conditions identified in the immediately preceding part of this judgment have been met.
Among the issues appropriate for consideration are the following.
(a) Public Interest
The court is entitled to have consideration for the public interest in deciding whether or not to appoint inspectors. As was said by Murray J. in Dunnes Stores Ireland Company v. Ryan [2002] 2 IR 60,
“While the Companies Acts generally include provisions relating to the incorporation, registration and structure of companies, as well as such matters as duties of directors towards their members, they also govern fundamental aspects of the relationship between companies and the rest of society. The advantages of trading or conducting business through a corporate entity, such as a company with limited liability, are self-evident. Companies have a legal personality separate and distinct from their individual members. Many aspects of how they conduct their affairs as distinct entities are regulated by law in the public interest. The Companies Acts are the primary source of that regulatory regime, even though there are other statutes which may regulate how a company or its directors conduct its affairs, such as the Competition Acts, certain provisions of the Finance Acts or the Central Bank Acts. Statutory measures specifically directed at companies, in particular the Companies Acts, define, inter alia, obligations specific to companies and their directors with which they are bound to comply in the public interest…
I do not think the statutory duties and obligations imposed on companies and directors can be viewed simply as an end in themselves for their benefit, since those duties have a function in preventing abuses of their corporate status which may lead to consequences which are not just breaches of the Companies Acts per se, but may have other far reaching consequences of public interest.”
Those comments were made in the context of powers of appointment of an authorised officer but they are relevant to the courts consideration in appointing an inspector as is the following statement from the same judge in the same case:-
“The second respondent (the appointing Minister) must also be concerned with the damage which such breaches have on public confidence in how companies conduct their affairs, particularly where such breaches may be extensive and have a potential consequence of undermining confidence in corporate status and its governance.”
(b) Proportionality
The court is entitled to consider whether the appointment of inspectors would be disproportionate having regard to the information put before it.
The court ought to take into account what is alluded to by Goldstone J. in Sage Holdings Ltd v. Unisec Group Ltd & Ors [1982] 1 WLD 337 where he said:-
“The company may be caused harm and damage and be put to substantial expense. This is especially so in the case of a large public company where its reputation in the market may become tarnished by the very fact of an investigation being ordered. However, the potential harm and damage from this source is probably less substantial in the case of a non-trading company. This consideration, in my opinion, should temper the natural inclination the court may have to protect members of the public from those whose control of large companies has become entrenched.”
The appointment of inspectors is a serious matter and such a sledgehammer should not be used to crack a nut.
I reiterate that this is not an exhaustive exposition of the matters which the court is entitled to take into account on an application of this sort.
Application of the Principles
I now turn to the application of these principles to the facts of this case. “
National Irish Bank, Re (No. 1)
[1998] IEHC 116; [1999] 3 IR 145; [1999] 1 ILRM 321
Mr. Justice Peter Shanley .
“PART II OF THE COMPANIES ACT, 1990
Part II of the Companies Act, 1990 deals with investigations and provides for the appointment of Inspectors by the Court for the purposes of carrying out those investigations. Section 8 in particular provides for the appointment of Inspectors on the application of the Minister where the Court is, inter alia, satisfied that there are circumstances suggesting that the affairs of a company are being conducted in an unlawful manner or for a fraudulent or unlawful purpose. Section 10 imposes an obligation on officers of the company and others to produce all books and documents of the company under investigation and to give all assistance to the Inspectors.
Section 10 obliges directors and others to give all assistance to the Inspector: this duty clearly embraces answering questions put to them by the Inspector. Section 18 provides that such answers may be used against the person. The only entitlement expressly given to a person to refuse to answer a question is where the answer would disclose information the subject of legal professional privilege. I am satisfied that I cannot construe Section 10 of the Act as preserving the privilege against self-incrimination: to do so would require a qualification on the duty imposed by the Act such that the duty to answer applied save where the giving of such answers would tend to incriminate the witness . No such saver appears in Section 10. It seems to me clear that, had the Oireachtas intended to save the privilege, it could easily have done so. I am satisfied therefore that as a matter of statutory interpretation a witness may not refuse to answer questions on the grounds that his answers might tend to incriminate him and that Section 10 has the effect of impliedly abrogating the right against self-incrimination. I am fortified in this view by the large number of instances where our Courts have allowed that statutory provisions have impliedly abrogated the right to self-incrimination. Some of the many statutory provisions are outlined by O’Flaherty J. in Heaney -v- Ireland , Supra, at page 587. Cases which have dealt with such statutory provisions are the People (at the suit of the Attorney General) -v- Gilbert 1973 IR 383 (in relation to Section 107 of the Road Traffic Act, 1961); Heaney -v- Ireland , Supra (in relation to Section 52 of the Offences Against the State Act, 1939 ); the D.P.P. -v- McGowan 1979 IR 45 (in relation to Section 52 of the Offences Against the State Act, 1939). Apart from the foregoing Irish cases in which the Courts were concerned with statutory provisions requiring persons to provide information, there are a number of English cases where the Courts in that jurisdiction have construed a statute as not preserving the privilege. In passing, I should note that I have found no Irish or English authority for the proposition (advanced by the Respondents) that a valid abrogation at common law requires the sterilisation of answers to questions or the fruits of those answers. The most relevant English authority on the question of abrogation of the privilege is the Court of Appeal decision in London United Investments Plc. 1992 2 All England Reports 842 where it was held that a company director or a person possessing relevant information was not entitled to invoke the common law privilege against self-incrimination when questioned by Inspectors appointed by the Secretary of State under Section 432(2) of the Companies Act, 1985 to investigate the affairs of the Company, since it was clear from the scheme and purpose of Part XIV of that Act that Inspectors would in many cases be appointed to investigate where there were circumstances suggesting that there had been fraud in the conduct or the management of the company’s affairs, that Parliament intended that a person possessing relevant information would be under a duty to comply with the requirements to answer questions properly put to him by the Inspectors and that the Inspectors report might lead the Secretary of State to petition for the winding up of the company or to bring civil proceedings in the company’s name in the public interest. In those circumstances the Court held that the privilege against self-incrimination had been impliedly removed by Part XIV of the 1985 Act.
23. Dillon L.J. said at page 853:-
“On these provisions I reach without hesitation the conclusion that as:
(i) Inspectors will in very many cases have been appointed where there are circumstances suggesting there has been a fraud in the conduct of management of a company’s affairs and
(ii) persons questioned are bound to answer the Inspectors’ questions and
(iii) the Inspector’s report may lead the Secretary of State to petition for the winding up of the company or to bring civil proceedings in the company’s name and the public interest, the privilege against self-incrimination is impliedly excluded and is not available to the person being questioned by the Inspectors”.
24. While in my view the words of Section 10, and the other Sections of Part II of the Companies Act, 1990, make it clear that the legislature intended to abrogate the privilege against self-incrimination such as might arise during the course of an Inspector’s investigation, and, while both Irish and English authority suggests that the privilege can be abrogated by statute nonetheless the Respondents submit that I should go further and examine the legislative history of the Companies Act, 1990 with a view to construing Section 10 of the 1990 Act. In particular, the Respondents suggest that the Court should use the Dail debates as an aid in the construction of Section 10(5) of the Act. In The People (the Director of Public Prosecutions) -v- McDonagh 1996 1 IR 565, Costello P., sitting as a Judge of the Supreme Court expressed the view (with which the other members of the Court agreed) at page 570 that:-
“It seems to me that the Court should have regard to any aspect of the enactment’s legislative history which may be of assistance”.
25. Dail debates are, of course, a record of part of the legislative history of an Act of the Oireachtas, and it seems clear that I can look at these debates in construing Section 10 of the 1990 Act. The Respondents point to the Dail debates for the 14th December, 1988; there the Minister for State at the Department of Industry and Commerce said at
Column 1514:
“My main problem with Deputy Cullen’s amendment is that it is in direct conflict with Section 18 which provides that an answer given by a person to a question put to him by an Inspector may be used in evidence against him. The Section also appears in corresponding UK legislation and is important to ensure effective investigation procedures. Without it I do not think we could have effective investigation procedures. I understand Deputy Bruton’s reservations about this procedure but, now that we have adopted the notion of having it, it is important that we make it effective.
On the other hand the idea behind the amendment may be covered in Section 10(5) which provides that, if a person refuses to answer an Inspector’s question, the Inspector may refer the matter to the Court. Where this happens the Court can enquire into the case and after hearing evidence for the defence can punish the person concerned as if he had been guilty of contempt of Court. If a person persisted in claiming that his refusal to answer a question was based on a fear that he might incriminate himself the Court would be in a fairly good position to adjudicate on any such claim under Section 10(5)”.
26. This view as expressed by the Minister, it is urged, assists the Court in concluding that Section 10, far from abrogating the privilege against self-incrimination, was providing a forum for its existence. While of course respecting the views expressed by the Minister it does not appear to me, on a perusal of the debate, that his contribution to that debate had the effect of indicating a legislative intention to preserve the privilege against self-incrimination. His contribution represented Dáil material more evidencing his own personal view of the effect of Section 10 than material disclosing the legislative intention behind the section. Having regard to the unambiguous language used in Part II of the Companies Act, 1990 (which clearly indicates, in my view, a legislative intention to abrogate the privilege against self-incrimination) I do not feel it would be safe to rely upon what was said by the Minister at the Committee stage of the Companies Bill, 1987 as a guide to the legislative intention behind Part II of the Act.
27. Accordingly, a consideration of the scheme and purpose of Part II of the 1990 Companies Act, a consideration of its legislative history and a consideration of the various Irish and English authorities on the question of the statutory abrogation of the privilege against self-incrimination lead me to the firm conclusion that the statute had the effect of abrogating the privilege. It remains, of course, to be considered whether such an abrogation was constitutionally permissible.
37. I am satisfied that there is no entitlement to invoke the panoply of rights identified by the Supreme Court at the information gathering stage of the Inspectors’ work. The procedures identified by the Inspectors following the outcome of the first stage accord in my view with the requirements of fairness and justice and guarantee, where appropriate, the exercise of the rights identified in the Haughey case. I therefore determine that the procedures outlined by the Inspectors in their letters dated the 4th June, 1998 (contained within Exhibit C and D to the Affidavit of John Blayney and Tom Grace sworn on the 11th June, 1998) are consistent with the requirements of natural and constitutional justice.
National Irish Bank, Re (No.2)
[1999] IEHC 134; [1999] 3 IR 190; [1999] 2 ILRM 443
Mr Justice Kelly
“THE LEGAL POSITION
81. The Applicants say that having regard to the position in Re Haughey [1971] IR 217 they should now be entitled to the documents which they seek. This is so notwithstanding the fact that the Inspectors are at this stage only engaged in the first stage of their investigation, namely information-gathering. I have formed the view that the Applicants have misconceived the functions of Inspectors appointed under the provisions of the Companies Act, 1990. An inspection of this type is primarily investigative. It only becomes adversarial in limited circumstances. In Chestvale Properties Ltd. -v- Glackin [1993] 3 IR 35, Murphy J. cited with approval the observations of Sachs L.J. in Re Pergamon Press Limited [1971] Ch. 388.
One way or another it may be a considerable time before the inspectors have before them sufficient information to see any pattern in the affairs of a company. Even when this pattern commences to take shape, they may need further material before the possibility emerges of any criticism attaching to individuals. Moreover, that possibility may derive from documentary evidence which is in substance uncontested, or it may derive from a matter on which there may be a conflict of evidence between some witness and the person to whom blame may be attributed. In the latter case there may come the stage when the inspectors have to decide whether simply to record that conflict or whether to seek to resolve it. The more complex the affairs of the company and the greater the number of subsidiary companies, the longer it may take before those respective stages are reached”.
82. Murphy J. went on to say:-
“The present proceedings were instituted when the inquiry had reached only a very preliminary and exploratory stage. … Even if the presumption were otherwise and that one should anticipate a stage being reached in which the Respondent would find it necessary to make a choice as between conflicting claims, it is clear that that stage has not yet been reached. Accordingly, the present application is premature insofar as it is based upon the contention that the inspector is engaged in a task which at present involves him in a quasi-judicial function”.
83. In the present case it is to be noted that the Inspectors are only at a preliminary stage of their investigation and have not been called upon to exercise any quasi-judicial functions since that will not arise until stage two is reached. At stage two of their investigation they have, in my view, made it clear that all of the rights to which a party might be entitled under the decision in Re Haughey will be respected.
84. The English inquiry which gave rise to the decision in Re Pergamon Press Ltd. spawned further litigation which was also dealt with in the Court of Appeal. It was Maxwell -v- The Department of Trade and Industry and Ors [1974] 2 All ER 122. There Lord Denning M.R., called attention to what an investigation under the Companies Act is not. He said, at page 127:-
“Remember what it is not. It is not a trial of anyone, nor anything like it. There is no accused person. There is no prosecutor. There is no charge. It is not like a disciplinary proceeding before a professional body. Nor is it like an application to expel a man from a trade union or a club, or anything of that kind. It is not even like a committee which considers whether there is a prima facie case against a person. It is simply an investigation, without anyone being accused.”
85. Insofar as this jurisdiction is concerned that, in my view, is a correct summary of the position which obtains at least insofar as the investigatory stage of the Inspectors’ task is concerned. Once one moves into the second stage then, whilst the investigation is not transformed into an adversarial hearing, nonetheless fair procedures have to be observed insofar as any adverse conclusions may be drawn in relation to individuals. The procedure which the Inspectors have outlined as one which they will follow if such a stage is reached is in complete compliance with their obligations to observe fair procedures under the relevant jurisprudence. It follows therefore, that I take precisely the same view as did Shanley J. that there is no entitlement to invoke the rights established in Re Haughey at the information-gathering stage of the Inspectors’ work.
86. There remains just one further argument to be dealt with. It has been said on the part of the Applicants that Shanley J. described the rights identified by the Supreme Court in the case of Re Haughey as rights which the Court believed should be afforded to a person who had been accused of conduct reflecting on his character and good name and where the accusations were made upon the hearsay evidence of a witness before the public accounts committee of Dáil Éireann. He went on then to state that whilst allegations of the commission of criminal offences had been made in the media against the bank, the case differed from the Haughey case where the accusations were made by evidence under oath. It is submitted that this was the distinguishing feature which triggered the Haughey rights. Two observations may be made concerning this submission. First, whilst the Applicants are correct in pointing out the distinction which Shanley J. drew between unsworn allegations and allegations which were given in the form of evidence nonetheless in the immediate following paragraph of his judgment he makes it clear that there is no entitlement to invoke the panoply of rights identified by the Supreme Court at the information-gathering stage of the Inspectors’ work.
87. Secondly, whilst the distinction is drawn between allegations made in newspapers and evidence tendered on oath, it does not appear to me that such a distinction triggers the entitlement to the rights identified in the Haughey decision. The examination of interviewees under oath is but one of the methods available to Inspectors conducting an investigation under the Companies Act. But it is not the mere fact of the making of an allegation under oath which elevates the status of an accusation to one which calls for a response. What brings that about is a determination by the Inspectors (a) that they will admit such an allegation as evidence and (b) that the admission of it may give rise to adverse conclusions being drawn against the party accused. It is then and only then that the rights identified by the Supreme Court in Re Haughey come into play.
88. In his closing submission, Counsel on behalf of the Applicants sought to argue that they are in the position of an accused person and that such a person is entitled to have a book of evidence served upon him so as to enable him to prepare his case. A similar right should be afforded to the Applicants it is said. This analogy, in my view, underscores the unsustainable nature of this application.
89. True it is that an accused person is entitled to a book of evidence. But before that stage is reached there is (a) a Garda investigation, (b) the submission of the appropriate papers to the Director of Public Prosecutions, (c) a decision by the Director of Public Prosecutions to prosecute and (d) the preferring of the charges with a view to a preliminary investigation and a return for trial.
90. If the analogy with a criminal case is accepted, it is clear that at this stage neither of the Applicants could be regarded as the equivalent of an accused person. This investigation is only at the same stage as the preliminary police investigation. Counsel could not cite any authority to the effect that a potentially accused person is entitled to copies of statements made to the police in the course of their investigation. I do not believe that there is any such authority. Neither could there be any legal basis for such an entitlement. First, the police investigation may not result in any charges being preferred and secondly, such an exercise would entirely hamper the conduct of an investigation. In my view, the same result would be had here. When the Inspectors come to stage two of their investigation there may be nothing for the bank or the company to answer. Secondly, the correspondence from the Solicitors for the Applicants makes it clear that they wish to have these documents so that they may at this stage respond to the allegations made. Such an exercise would merely prove a hindrance to the Inspectors in the carrying out of their functions, is unnecessary and would be wasteful of both time and resources. “
Minister for Justice v. Suicre Eireann
[1992] 2 I.R. 227
Lynch J.
“As a general rule and subject to the facts of each individual case I completely agree with this submission. Companies are creatures of the law and are controlled by the law and it falls to the executive power of the State to supervise them. Hence the scheme of the Act provides for, in effect, guaranteeing by the State the costs and expenses of an investigation, including the fees of the inspector, because of necessity an inspector must be a highly qualified professional person whether an accountant or a lawyer. Hence although the State may have no interest in a company, which might even be a private company, circumstances of such irregularity may arise as to require an investigation either under s. 7 or s. 8 of the Act of 1990. If, under s. 7, the court may require security for the costs (not exceeding £100,000) from the applicant for the investigation, but if, under s. 8, it is a matter of such public concern, even though the State has no direct interest in the company, that no security for the costs is required, in such circumstances it is prima facie only right and proper that the company or companies dealt with in the report, even though not adversely dealt with therein, should reimburse the State the costs and expenses pursuant to s. 13, sub-s. 1 and then in appropriate circumstances such companies can seek reimbursement themselves under sub-section 2. It will be noted that under sub-s. 1 it is only a body corporate that can be ordered to reimburse the Minister for Justice, whereas under sub-s. 2 individual persons can be ordered to reimburse either the Minister or a company which may already have done so under sub-section 1.
The facts of each case have to be taken into account however and in this case there are very special facts.
……
It was submitted on behalf of the State that the rule in Foss v. Harbottle (1843) 2 Hare 461 precludes me from looking behind Siuicre Eireann , Greencore and the companies forming the enterprise to the shareholder owners thereof, but having carefully considered that case I do not think that it so precludes me. And I am of opinion that the realities of the case require me to bear in mind who was the beneficial shareholder owner at the time of the wrongdoing, and who is now the beneficial shareholder owner at the time when the expenses of and incidental to the investigation are sought to be imposed upon the enterprise.
Apart altogether from the fact that innocent shareholder owners of the enterprise would now be damnified by an order in favour of the State, there is the factor of who was in ultimate control of the enterprise at the material time. As between the body having ultimate control of the enterprise at the time of the alleged wrongdoing, and successors to that ultimate control, especially insofar as they are without any notice of the wrongdoing, it seems to me that it is more equitable that those in ultimate control at the time of the wrongdoing (even though unaware of it at that time) should bear the costs of the investigation rather than their successors especially to the extent that such successors were wholly unaware of any such wrongdoing. On this basis it might be suggested that the enterprise should pay 45% or 30% of the expenses seeing that the State retained ownership of those percentages as above but I do not think that that follows because the wholly innocent present shareholder owners will still be penalised to the benefit of the State.
Moreover the enterprise has incurred very substantial costs and expenses itself in meeting the inspectors’ requirements and also the requirements of the s. 14 inspector, as well as an internal inquiry by independent accountants and inquiries by the Revenue Commissioners. In all the very special circumstances of this case I do not think that it
would be just or equitable to direct that any of the first nine respondents being part of the enterprise should be liable to repay to the applicant, the Minister for Justice, any of the expenses of and incidental to the investigation by the inspectors and I accordingly refuse the Minister’s application as against those respondents.