Dunnes Stores Ireland Company v Ryan

• Jurisdiction: Ireland
• Judge: Mr. Justice Herbert,Keane C.J.
• Judgment Date: 05 June 2002
• Neutral Citation: [2002] IESC 7
• Date: 05 June 2002
• Court: Supreme Court
• Docket Number: [S.C. Nos. 280 and 291 of 2000 and 1999 No. 33 J.R.]

DUNNES STORES (IRL) CO & HEFFERNAN v. RYAN & MINISTER FOR ENTERPRISE

BETWEEN

DUNNES STORES IRELAND COMPANY, DUNNES STORES (ILAC CENTREAND LIMITED) AND MARGARET HEFFERNAN

APPLICANTS/RESPONDENTS

AND

GERARD RYAN AND THE MINISTER FOR ENTERPRISE, TRADE ANDEMPLOYMENT

RESPONDENTS/APPELLANTS

IRELAND AND THE ATTORNEY GENERAL

NOTICE PARTIES

[2002] IESC 7

280/00

291/00

THE SUPREME COURT

Synopsis:

JUDICIAL REVIEW

Company law

Commercial law - Constitutional law - Practice and procedure - Corporate governance - Appointment of authorised officer - Whether Minister obliged to give reasons for appointment - Whether authorised officer entitled to request books and records - Whether appointment of authorised officer sustainable - Companies Act, 1990 section 19 (280 & 291/2000 - Supreme Court - 01/02/2002) - [2002] 2 IR 60

Dunnes Stores v Ryan

Facts: The proceedings arose out of a decision by the second named respondent to appoint an authorised officer to examine the books and documents of the applicants. The applicants initiated judicial review proceedings challenging the validity of the appointment. Various reliefs were granted in the High Court. On appeal the Supreme Court set aside the High Court order and remitted proceedings to the High Court. In the High Court Butler J held that there was no evidence of complaints by members of the company. The decision to appoint an authorised officer was unreasonable, irrational and was therefore ultra vires. The respondents appealed against the judgment.

Held by the Supreme Court (Keane CJ, Murray J and Herbert J delivering judgment; Denham J and Murphy J agreeing) in allowing the appeal and remitting the matter to the High Court. Keane CJ held that the Oireachtas had given the Minister a general supervisory jurisdiction over companies formed under the Acts. The inquiry instituted by the Minister was justified on the grounds that there were circumstances suggesting that the affairs of the company had been conducted in a manner which was unfairly prejudicial to some part of its members. Murray J held that it had not been established that the appointment of an authorised officer pursuant to section 19(2)(a) of the Companies Act, 1990 was either irrational or disproportionate. Herbert J held that the Minister had been entitled to rely upon the identified findings of the McCracken and Buchanan inquiries and was entitled to have given the direction in question.

Citations:

COMPANIES ACT 1990 S19(2)(a)

COMPANIES ACT 1990 S19(2)(b)(ii)

COMPANIES ACT 1990 S19(2)(b)(iii)

COMPANIES ACT 1990 S19(2)(d)

COMPANIES ACT 1990 S19(2)(f)

COMPANIES ACT 1990 S21

COMPANIES ACT 1990 S19(1)

DUNNES STORES IRELAND V MALONEY 1999 3 IR 543

FREEDOM OF INFORMATION ACT 1997

COMPANIES ACT 1990 S8

COMPANIES ACT 1990 S19(5)

COMPANIES ACT 1990 S19(6)

CONSTITUTION ART 38.1

CONSTITUTION ART 40.1

KEEGAN, STATE V STARDUST COMPENSATION TRIBUNAL 1986 IR 642

COMPANIES ACT 1990 S19(2)(v)(ii)

COMPANIES ACT 1990 S21(1)

COMPANIES ACT 1990 S19(1)(f)

COMPANIES ACT 1990 S20

COMPANIES ACT 1990 S19(3)

COMPANIES (AMDT) ACT 1999 S21

COMPANIES ACT 1990 S8(1)

COMPANIES ACT 1990 S14

COMPANIES ACT 1990 S19(4)

COMPANIES ACT 1990 S20(2)(f)

COMPANIES ACT 1990 S1(2)

COMPANIES ACT 1990 S8(1)

COMPANIES ACT 1990 S8(2)

COMPANIES ACT 1990 S19(2)

COMPANIES ACT 1990 S19(7)

EAST DONEGAL CO-OP V AG 1970 IR 317

LYNCH, STATE V COONEY 1992 IR 337

COMPANIES ACT 1990 S19

COMPANIES ACT 1990 S66

COMMITTEE ON COURT PRACTICE AND PROCEDURE 11TH INTERIM REPORT 1970

MCCRACKEN REPORT OF THE TRIBUNAL OF INQUIRY (DUNNES PAYMENTS) STATIONERY OFFICE 1997

1 1st day of February 2002byKeane C.J.

Keane C.J.

Introduction

2 The facts in this case are largely not in dispute and can be summarised as follows. On the 11th September, 1997, the second namedrespondent/appellant (hereafter "the Minister") wrote to the third named applicant/respondent (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 enquiries of certain companies to clarify what breaches did in fact take place..."

3 The report referred to was that of a tribunal established under the Tribunals of Inquiries Acts, 1921 to 1998, of which the sole member was Mr. Justice McCracken. The remit of the Tribunal was to enquire into 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 named 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 a result of proceedings which were instituted by other shareholders and directors of the companies, including Mrs. Heffernan, against Mr. Ben Dunne. Those proceedings were ultimately the subject ofasettlement between the parties. Mrs. Heffernan and her brother, Mr. Frank Dunne had also appointed a 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 carried out an initial inquiry into the question of the irregular payments, and to the tribunal presided over by Mr. Justice McCracken.

4 Following the receipt of the letter of 11th September from the Minister, Mrs. Heffernan wrote to her expressing her concern that the companies should be subjected to a further inquiry which, she claimed, was unnecessary and would result in further damaging publicity to the companies. There followed further correspondence between the companies and the Minister's officials concerning her request, in which the companies, while indicating their willingness to co-operate with the Minister and furnishing her with any documents she required, expressed their anxiety at the wide ranging nature of the requests emanating from the Minister and the difficulties facing the companies in meeting her requests. Ultimately on the 22nd July, 1998, the Minister wrote asfollows:-

"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 Ireland Company is paragraphs (a), (b)(ii), (b)(iii), (d), (f) of s.19 (2) of the Companies Act 1990, while that for the appointment to Dunnes Stores (Ilac Centre) Limited is paragraphs (a), (b)(ii), (f) of s.19 (2) of the 1990 Act. You may know that s. 21 of the 1990 Act contains very strict limitations on the publication or disclosure of any information obtained by me on foot of a s.19 examination of books and documents."

5 The letter went on to state that the authorised officer was Mr. George Maloney, FCCA.

6 Mrs. Heffernan replied on the 22nd July expressing her surprise at the proposal to appoint an authorised officer, but on the same day, Mr. Maloney wrote to her informing her that he had been so appointed by warrants signed by the Minister on that day. The warrants were in the following terms:-

" Companies Acts, 1963– 1990

Warrant of appointment of authorised officer

I, Mary Harney, T.D., Tanaiste and Minister for Enterprise, Trade and Employment, pursuant to the powers vested in me under s. 19 of the Companies Act, 1990, and every other power me thereunto enabling, considering that there is good reason so to do, dohereby authorise George Maloney to require the company listed hereunder, being a body as defined in s. 19 (1) of the Companies Act, 1990, to produce the books and documents specified by him forthwith and to exercise all the necessary powers under the said Companies Act 1990.

Dunnes Stores Ireland Company.

Mary Harney T.D.

Tanaiste and Minister for Enterprise, Trade and Employment.

22 July, 1998"

7 Mr. Maloney wrote again on the 24th July, to Mrs. Heffernan enclosing a schedule of documentation which he said he required for the purposes of his examination.

8 On the 4th 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 Mr. Maloney as an authorised officer pursuant to s. 19 of the 1990 Act on two principal grounds, i.e.

9 (a) the failure of the Minister to give any or any adequate reasons for the purported appointment of the authorised officer;

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

11 Mr. Maloney at a later date resigned and was replaced as the authorised officer by the first named respondent, Mr. Gerard Ryan, and the alleged conflict of interest accordingly ceased to be of any relevance.

12 A statement of opposition having been filed on behalf of Mr. Maloney and the Minister, the hearing of the substantial issues came on before Laffoy J. In a reserved judgment, reported sub nom Dunnes Stores Ireland Company and Others -v- Maloney andAnor at (1999) 3 I.R. 543, Laffoy J 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, saying:-

"In my view, this is a case in which procedural fairness requires that the Minister give reasons for her decision. The applicants have demonstrated a bona fide belief that the Minister has misused her powers in appointing an authorised officer....