Dowling and Others v The Minister for Finance and Others

• Jurisdiction: Ireland
• Judge: Ms. Justice O'Malley
• Judgment Date: 01 December 2017
• Neutral Citation: [2017] IEHC 832
• Court: High Court
• Docket Number: [Record No. 2011/239 MCA]
• Date: 01 December 2017

[2017] IEHC 832

THE HIGH COURT

O'Malley Iseult J.

[Record No. 2011/239 MCA]

IN THE MATTER OF IRISH LIFE AND PERMANENT GROUP HOLDINGS PLC AND IN THE MATTER OF IRISH LIFE AND PERMANENT PLC AND IN THE MATTER OF AN APPLICATION FOR THE SETTING ASIDE PURSUANT TO SECTION 11 OF THE CREDIT INSTITUTIONS (STABILISATION) ACT 2010 OF THE DIRECTION ORDER WHICH WAS MADE ON THE 26TH JULY 2011 PURSUANT TO SECTION 9 OF THE CREDIT INSTITUTIONS (STABILISATION) ACT 2010 AND ANCILLARY ORDERS

BETWEEN/

GERARD DOWLING, PADRAIG MCMANUS, PIOTR SKOCZYLAS

AND

SCOTCHSTONE CAPITAL FUND LIMITED

APPLICANTS

AND

THE MINISTER FOR FINANCE

RESPONDENT

AND

PERMANENT TSB GROUP HOLDINGS AND PERMANENT TSB PLC

NOTICE PARTIES

Banking and Finance – Practice & Procedure – S. 64 of the Credit Institutions (Stabilisation) Act 2010 – Leave to appeal – O.99 r, 1(3) of the Rules of the Superior Courts – Order for costs – Exceptional public importance – Public interest

Facts: The key issues in the present case were as to whether the unsuccessful applicants required the leave of the Court to appeal; whether the leave to appeal should be granted; and whether any party was entitled to an order for costs of the substantive High Court proceedings. The respondent and notice party submitted that s.64 of the Credit Institutions (Stabilisation) Act 2010 should be read by reference to the other provisions of the Act that clarified the intention of the Act to the effect that the right of appeal was to be excluded. The respondent and notice parties sought their costs of the proceedings against the applicants, whereas the applicants argued that the litigation was of public interest and not solely for personal advantage. The applicants also sought their costs against the first respondent.

Ms. Justice O'Malley determined that the applicant did not require the leave of the Court to file an appeal to the Court of Appeal. The Court held that the legislature had not clearly provided that the right of appeal against a refusal to set aside a direction order was limited by s. 64.of the Act of 2010. The Court noted that there were points of law of exceptional public importance in relation to certain questions formulated by the applicants and thus, the Court granted leave to appeal to the applicants on those questions. Those questions pertained to the analysis of the rulings of the Court of Justice of the European Union by the presiding judge in the substantive judgments and the application of the terms of s. 11 of the Act of 2010 by the presiding judge. The Court awarded the first and second applicants 20% of each of their costs. The Court also awarded 40% of costs to the third applicant and 40% of the costs to the fourth applicant.

JUDGMENT of Ms. Justice O'Malley delivered the 1st day of December 2017

Introduction

1 This judgment relates to three issues – whether the unsuccessful applicants require the leave of the Court to appeal; whether, if it is required, leave to appeal should be granted; and whether any party is entitled to an order for the costs of the High Court proceedings.

2 The application in the case was to set aside a direction order made by the High Court under s. 9 of the Credit institutions (Stabilisation) Act 2010. Pursuant to s.11, such an application could only be granted if the Court to which the application was made formed the opinion that there was non-compliance with any of the procedural requirements set out in s.7 of the Act, or that the opinion of the Minister (that the direction order was necessary to achieve a specified purpose of the Act) was unreasonable or was vitiated by error of law.

3 Two substantive judgments have been delivered in the matter. In the first ( Dowling v. Minister for Finance [2014] IEHC 418) I determined that the procedural requirements had been complied with. However, I found it necessary to refer certain issues of law to the Court of Justice of the European Union for preliminary ruling. Upon receipt of that ruling, and after hearing further submissions, I delivered a final judgment dismissing the application on the 31st July 2017 ( Dowling v. Minister for Finance [2017] IEHC 520).

4 I held, in summary, that the applicants had not discharged the onus of proving that the Minister's opinion was unreasonable or vitiated by legal error.

The nature of the Act

5 The relevant parts of the Act, including the long title and the preamble (in itself an unusual feature) are considered in detail in Section G of the first judgment. They will not be set out in full here, but it is necessary to mention briefly the references in the preamble to the 'serious disturbance in the economy of the State'; the necessity for measures to address a 'unique and unprecedented economic crisis'; a 'continuing threat to the stability of certain credit institutions in the State'; and the legislative perception that 'the urgent reorganisation of certain credit institutions' was of 'systemic importance' to the State. It was stated that the common good required 'permanent or temporary interference with the rights, including property rights' of persons affected by the performance of functions under the Act.

6 In the introductory paragraphs of the first judgment I referred to some other judicial descriptions of the Act – Fennelly J. called it 'an extraordinary piece of legislation' in Dowling v. Minister for Finance [2013] IESC 58, while in Dowling v Minister for Finance [2012] IEHC 89 Feeney J. had expressed the view that it was 'unique, unprecedented and stringent'.

7 I noted (see: [2014] IEHC 418) that the statute permitted a 'truly radical encroachment on the legal rights of shareholders'. I described (at para.1.8) its operation in this case as follows:

'In summary, the effect of the order was to enable the Minister to acquire 99.2% of the company. This was done by compelling it to issue a very large number of new shares to him, at a share price dictated by him (being just under 6.5 cents per share), in return for the sum of €2.7 billion. For this purpose control of the company was taken from its organs and shareholders; the Memorandum and Articles of Association were altered; the decisions taken at the EGM were nullified and the company was delisted from the London and Irish Stock Exchanges. Further, various relevant legal rules, whether deriving from statute, common law, equity, codes of practice or contract were in effect disapplied insofar as the company was concerned.'

8 The purposes of the Act, intended to be achieved by the direction order mechanism, are set out in s. 4. So far as they are relevant, they are to be found in paragraph 26.4 of the first judgment.

9 The statutory procedure for obtaining a direction order firstly required the Minister for Finance ('the Minister') to form an opinion that a direction order was necessary to achieve a specified purpose of the Act. Having done so, he could make a proposed direction order in accordance with s. 7. The Act imposes certain obligations in relation to that process – the Minister was obliged to give notice to the company and to consult with the Governor of the Central Bank. That process having been carried out, (and the company having refused, in the circumstances set out in the first judgment, to consent to the Minister's proposals) he made an ex parte application to the High Court under s. 9 for a direction order in terms of the proposed direction order. The Court hearing that application was obliged to make the order if of the opinion that the procedural requirements had been complied with and that the Minister's opinion as to the necessity for the order was reasonable and was not vitiated by any error of law.

10 Although the procedure was ex parte, no further hearing was provided for and the order took full effect as directed. Section 10 provided that the Minister (but not, it would appear, any other person) might apply to the Court, on notice or otherwise, for a variation where he considered such to be necessary.

11 By virtue of s. 11, either the institution or a member of the institution was entitled to apply, under strict time constraints, for the setting aside of the order. Again, the test was whether the statutory requirements had been met and whether the Minister's opinion was reasonable or vitiated by any error of law. If any of those conditions had been found not to be satisfied, the Court would have been empowered set aside, vary or amend the direction order.

12 The Act did also envisage the possibility of judicial review proceedings, but it must be noted that, firstly, an order of the High Court cannot be challenged by way of judicial review (although presumably a proposed direction order made by the Minister could be) and, secondly, that s. 63 of the Act provided that a person entitled to seek an order under s.11 would not be entitled to judicial review if either they did not pursue the former remedy or did so unsuccessfully. It would seem, therefore, that judicial review proceedings were to be confined to persons, other than the company itself or members thereof, aggrieved by the actions of the Minister in or about the obtaining of a direction order.

Rights of Appeal under the Act

13 The first question now arising is whether or not the provisions of s. 64 of the Credit Institutions (Stabilisation) Act 2010 apply to these proceedings, with the effect that the unsuccessful applicants require the leave of the Court to appeal. The Act has now expired, but obviously these proceedings continue to be governed by its terms.

14 Section 64 of the Act set out certain limitations on the right of appeal against orders made under the Act as follows:

'64.— (1) The determination of the Court of an application for leave to apply for judicial review, or an application for judicial review, is final and no appeal lies from the decision of the Court to the Supreme Court in either case, except with the leave of the...