Director of Corporate Enforcement v Seymour

• Jurisdiction: Ireland
• Judge: Mr. Justice Roderick Murphy,Mr. Justice Diarmuid B. O'Donovan
• Judgment Date: 20 March 2007
• Neutral Citation: [2006] IEHC 369,[2007] IEHC 102
• Court: High Court
• Date: 20 March 2007

DIRECTOR OF CORPORATE ENFORCEMENT v SEYMOUR

IN THE MATTER OF NATIONAL IRISH BANK LIMITED AND

IN THE MATTER OF NATIONAL IRISH BANK FINANCIAL SERVICES

LIMITED AND

IN THE MATTER OF THE COMPANIES ACTS, 1963– 2003 AND

IN THE MATTER OF AN APPLICATION BY THE DIRECTOR OF

CORPORATE ENFORCEMENT PURSUANT TO SECTION 160(2) OF

THE COMPANIES ACT, 1990

BETWEEN

THE DIRECTOR OF CORPORATE ENFORCEMENT

APPLICANT

and

BARRY SEYMOUR

RESPONDENT

[2006] IEHC 369

[2005/271 COS]

THE HIGH COURT

Abstract:

Practice and Procedure - Evidence - Application to cross-examine - Application for cross-examination of deponent on material deposed to in affidavit - Disqualification order sought by applicant - Whether cross-examination necessary for disposing of issues to be determined - Companies Act 1990 (No. 33), section 160 - Rules of the Superior Courts 1986, O 40, r. 1 & O. 75B, rr. 7 & 9

the applicant sought an order that the respondent be disqualified from acting as a director of a company pursuant to section 160 of the Companies Act 1990 consequent upon a report prepared by inspectors who had been appointed under section 8 of the Act of 1990 to investigate the affairs of the company of which the respondent was the chief executive at the relevant time. Affidavits were sworn on behalf of the applicant grounding the said application and the respondent swore affidavits in which he disputed the inferences and conclusions drawn from various facts averred to, which said facts were not disputed. The applicant sought to cross-examine the respondent on his affidavits.

Held by Mr Justice O'Donovan in directing the respondent to attend at the trial of the action for the purposes of being cross-examined on material sworn to in his affidavits that the function of cross-examination was to cast doubt upon the veracity, accuracy or reliability of evidence given by a witness. That if the opinion of an inspector appointed under section 8 of the Act of 1990 was challenged, the court was entitled to know the mindset of the challenger under cross-examination.

Reporter: P.C.

RSC O.75B r5

RSC O.40 r1

RSC O.75B r9

COMPANIES ACT 1990 S160(2)(b)

COMPANIES ACT 1990 S160(2)(d)

COMPANIES ACT 1990 S160(2)(e)

COMPANIES ACT 1990 S8

HOLLAND v INFORMATION COMMISSIONER UNREP SUPREME 15.12/2003 2003/26/6134

DIRECTOR OF CORPORATE ENFORCEMENT v D'ARCY UNREP HIGH COURT KELLY 26.10.2005

1 JUDGMENT of Mr. Justice Diarmuid B. O'Donovan delivered on the 16th day of November, 2006

2 In this case, the applicant has applied to the court pursuant to Order 75B, rule 7 and/or Order 40, rule 1 of the Rules of the Superior Courts and/or under the courts inherent jurisdiction for an order that the respondent herein do attend the trial of this action and be cross examined on his affidavits sworn and filed herein and that, if he fails to attend for cross examination, the said affidavits shall not be used at the trial of this action. For his part, the respondent maintains that his cross examination on his affidavits sworn herein is entirely inappropriate and, accordingly, he disputes the applicant's entitlement to the relief sought herein. In that regard;

3 Order 75B, rule 7 of the Rules of the Superior Courts provides:-

"Every application under the Act ( the Companies Act, 1990 {my insertion}) shall be grounded upon the affidavit of the party making such application and shall be heard and determined on affidavit unless the court otherwise orders."

4 and

5 Order 40(rule 1) of the Rules of the Superior Courts provides:-

"Upon any petition, motion or other application, evidence may be given by affidavit, but the court may, on the application of either party, order the attendance for cross examination of the person making any such affidavit."

6 Order 75B, rule 9 of the Rules of the Superior Courts also enables a court to direct a plenary hearing " in any case in which the court considers that it is either necessary or desirable in the interests of justice to do so (the emphasis is mine)."

BACKGROUND

7 In these proceedings, the applicant seeks an order that the respondent be disqualified from acting as a director of a company under s. 160(2)(b) and/or s. 160(2)(d) and/or s. 160(2)(e) of the Companies Act, 1990. This application arises from a report of inspectors appointed under s. 8 of the Companies Act, 1990, to investigate the affairs of National Irish Bank Limited and National Irish Bank Services Limited, which report was published by order of the High Court (Kelly J.) made on the 23rd day of July, 2004. The respondent was executive director and de facto chief executive of National Irish Bank Limited between the months of April 1994 and July 1996. In that report, there are findings of improper conduct on the part of National Irish Bank Limited and of National Irish Financial Services Limited and findings as to the responsibility of persons in the bank and in the financial services for this conduct. In particular, there were findings that internal audit reports, which had been copied to the respondent, pointed to the likelihood that the non-resident accounts therein referred to were in fact bogus and that the extent of reported documentary non-compliance was on such a scale that it constituted a further indication that a substantial proportion of the non-resident accounts could be bogus. Moreover, there were findings that the DIRT Theme Audit of December, 1994, highlighted the extent of the irregularities and that the respondent had been made aware of significant issues of documentary non-compliance, the lack of understanding at branches of the National Irish Bank's duty to satisfy itself on non-resident status and the resultant failure to deduct DIRT at the standard rate from interest paid or credited where the conditions for the operation of accounts whilst DIRT-exempt non-resident accounts were breached. Accordingly, the report concluded that the respondent should not only have been aware of the failure of the branches to hold properly completed non-resident accounts declarations, but should also have been aware of the fact that bogus non-resident accounts existed throughout the branch network. The report also found that, although the respondent attended meetings of senior management of National Irish Bank Limited convened to consider what corrective action was needed to remedy the situation disclosed by the DIRT Theme Audit, he failed to address or raise the question of potential liability of the bank to the Revenue Commissioners resulting from the irregularities. Furthermore, the report found that, despite corrective action taken by National Irish Bank Limited following the DIRT Theme Audit, there continued to be non-compliance in the branches with the requirements for DIRT-exempt status during the remainder of the respondent's term of office. While the report acknowledged the acceptance of a submission by the respondent that DIRT compliance procedures improved during his term of office, given that, as executive director, the respondent held ultimate responsibility to ensure that DIRT was deducted from interest paid or credited on all accounts subject to DIRT under the Finance Act, 1986, the respondent had failed to discharge that responsibility.

8 As I have already indicated, the said report was published by order of the High Court (Kelly J.) made on the 23rd day of July, 2004, following which, by notice of motion dated the 18th day of July, 2005 and grounded upon the affidavit of one Dick O'Rafferty, an officer of the Director of Corporate Enforcement, the applicant sought the relief sought in these proceedings. In that regard, the said affidavit of the said Dick O'Rafferty was sworn on the 18th day of July, 2005, in response to which the respondent swore a replying affidavit on the 29th day of September, 2005, to which Mr. O'Rafferty replied in an affidavit sworn on the 3rd day of November, 2005, which, in turn, was responded to by the applicant in an affidavit sworn on the 14th July, 2006, to which Mr. O'Rafferty replied in an affidavit sworn on the 14th July, 2006, which, in turn, was followed by a third affidavit sworn by the respondent on the 6th day of October, 2006. In each of the said affidavits, there is reference to exhibits which I do not consider it necessary to review for the purpose of this judgment.

DISCUSSION

9 While the applicant concedes that, in the course of the several affidavits sworn by him as aforesaid, the respondent raises few (if any) material points of factual disagreement with the averments in the said affidavits sworn by Mr. O'Rafferty, it is clear that he strenuously disputes all and any criticisms of his conduct in the said inspector's report. In particular, he disputes the inferences and opinions which the inspectors drew from the evidence which was before them and he maintains that it is not fair that he should be criticised for the fact that problems with DIRT compliance were not all eradicated by the time that he left the National Irish Bank Limited given that, as he asserts, once the problem was brought to his attention, he put in train a series of measures to correct the problem which, he says, did improve matters significantly. Accordingly, the respondent maintains that, as it is clear from the said affidavits sworn by him that he does not dispute any of the factual findings of the inspectors in the said report which are material to the relief sought by the applicant in these proceedings, it is not an appropriate case in which to direct a cross examination of the respondent on those affidavits.

10 In my view, it is axiomatic that, when, in the course of applications to the court which are required to be heard and determined on affidavit, as is the situation in this case, it becomes apparent from the affidavits sworn in those proceedings that there are material conflicts...