Dunnes Stores Ireland Company v Maloney

• Jurisdiction: Ireland
• Judge: Miss Justice Laffoy
• Judgment Date: 18 November 1998
• Neutral Citation: [1998] IEHC 165
• Court: High Court
• Docket Number: [1998 No. 325 J.R.]
• Date: 18 November 1998

DUNNES STORES v. MALONEY & MIN TRADE

JUDICIAL REVIEW

BETWEEN

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

APPLICANTS

AND

GEORGE MALONEY AND THE MINISTER FOR ENTERPRISE, TRADE AND EMPLOYMENT

RESPONDENTS

[1998] IEHC 165

No. 325 JR/1998

THE HIGH COURT

Synopsis

Company Law

Judicial review; company; investigation; authorised officer; judicial review sought of the decision of the Minister for Enterprise, Trade and Employment to appoint an authorised officer to examine the books and records of the applicant company; whether the Minister acted unreasonably, irrationally, ultra vires and in breach of natural and constitutional justice; whether the exercise of the power conferred on the Minister by s.19, Companies Act, 1990 is reviewable; whether the Minister is obliged to give advance notice and an opportunity to make representations when exercising his power under s.19; whether there is a duty on the Minister to state the reasons for the appointment of an authorised officer; whether the demands for documentation were excessive and unreasonable; whether the Minister failed to comply with the Freedom of Information Act, 1997; whether the applicant has locus standi; ss. 19 and 21, Companies Act, 1990 Held: Decision of the Minister is reviewable; declaration granted that the applicants are entitled to a written statement of the reasons for the decision to appoint an authorised officer; no obligation to give an opportunity to make representations; demand for documentation was excessive and unreasonable in its content (High Court: Laffoy J. 18/11/1998) - [1999] 3 IR 542

Dunnes Stores Ireland Co. v. Maloney

[1999] 1 ILRM 119

In July 1998, the Minister for Enterprise, Trade and Tourism appointed Mr George Maloney as an "authorised officer" under s.19 of the Companies Act 1990 to investigate the first- and second-named applicants. The Minister refused to give reasons for the appointment, other than to say that it followed "lengthy and detailed consideration".

Mr Maloney sent Dunnes and ILAC a list of documents covering a ten-year period, which he said he required within three days. Shortly afterwards, Mr Maloney resigned because of a possible conflict of interest, and another authorised officer was appointed.

The court ruled that it was entitled to review the formation of the opinion which must precede her decision. While the power conferred by s.19 was discretionary, it must be exercised fairly and judicially, in accordance with the principles of constitutional justice. While the Minister did not have to give advance notice of her intention to exercise her power, and the applicants had no entitlement to make advance representations, the Minister was obliged to give reasons for her decision and should swear an affidavit setting out those reasons.

The court also ruled that the demand for documents by Mr Maloney was excessive and unreasonable, and that the exposure of Mrs Heffernan to possible criminal sanctions for failing to provide the required explanation gave her locus standi to bring the application.

Citations:

COMPANIES ACT 1990 S19

COMPANIES ACT 1990 S19(2)

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(7)

COMPANIES ACT 1990 S19(4)

COMPANIES ACT 1990 S19(5)

COMPANIES ACT 1990 S19(6)

COMPANIES ACT 1990 S23(1)

BROADCASTING AUTHORITY ACT 1960 S31(1)

LYNCH, STATE V COONEY 1982 IR 337

EAST DONEGAL CO-OP V AG 1970 IR 317

LIVESTOCK MARTS ACT 1957

HAUGHEY V MORIARTY UNREP SUPREME 28.7.1998

ETHICS IN PUBLIC OFFICE ACT 1995 S2(2)

OFFICIAL SECRETS ACT 1963

1 JUDGMENT of Miss Justice Laffoy delivered on the 18th November 1998.

BACKGROUND

2 On 22nd July, 1998 the second named Respondent (the Minister) appointed the first named Respondent (Mr. Maloney) to be an authorised officer for the purposes of Section 19 of the Companies Act, 1990(the Act of 1990) in relation to the first named Applicant (Dunnes) and the second named Applicant (Ilac). On the same day the Minister wrote to the third named Applicant (Mrs Heffernan) apprising her of the appointment and stating that the legal basis for the appointment in the case of Dunnes was paragraphs (a), (b)(ii), (b)(iii), (d) and (f) of Section 19(2) and in the case of Ilac paragraphs (a), (b)(ii) and (f) of the same provision. Mrs Heffernan wrote to the Minister on the same day seeking an explanation of the basis of the Minister's decision, motivation and objectives. The Minister responded on 23rd July, 1998 stating that the appointment had been made after lengthy and detailed consideration, that she had before her the McCracken Tribunal Report and reports of authorised officers investigating other companies, which were subject to the very strict limitations of Section 21 of the Act of 1990 in relation to disclosure, and that " the ongoing ICAI Blayney enquiry" had yielded further material. Two further letters from Mrs Heffernan to the Minister dated respectively 27th and 28th July, in one of which Mrs Heffernan took issue with the Minister's interpretation of Section 21, elicited no further information. The correspondence closed with the Minister's letter of 31st July, 1998 in which the Minister stated that the failure by Dunnes and Ilac to comply with Mr. Maloney's requests could constitute offences under the Act of 1990.

3 There had been earlier correspondence between the Minister and Mrs Heffernan following the publication of the Report of the Tribunal of Inquiry (Dunnes Payments), which has become colloquially known as the McCracken Tribunal Report. This correspondence opened with a letter of 1lth September, 1997 from the Minister to Mrs Heffernan seeking co-operation in connection with inquiries being made by the Minister's Department in relation to certain companies, which co-operation would involve examining the books and documents of certain companies within the Dunnes Stores Group. That co-operation was forthcoming and there followed in the ensuing months a considerable amount of communication and passing of information and documentation from the Dunnes Stores Group to the Minister's Department and to Peter Fisher (Dr. Fisher), who had been appointed an authorised officer in relation to Garuda Limited (trading as Streamline Enterprises) and Gerard Ryan (Mr. Ryan), who had been appointed authorised officer in relation to Celtic Helicopters Limited. In February 1998 Mr. Fisher sought a copy of a report prepared by Price Waterhouse for Dunnes Stores Group in connection with legal proceedings initiated by Bernard Dunne concerning companies in the Dunnes Stores Group, which were compromised in November 1994. The request was not acceded to on the basis that the Report was a private Report, which was prepared for the purposes of litigation then in being, the vast bulk of which dealt with matters of no concern to the two companies being investigated. This position was adopted in a letter dated 5th March, 1998 to Mr. Fisher. It was not challenged.

4 Following his appointment, Mr. Maloney wrote to Dunnes on 22nd July, 1998 seeking a meeting with Mrs Heffernan and her fellow officers on 27th July, 1998 at 2.30 p.m. On 24th July, 1998, which was a Friday, Mr. Maloney sent to Dunnes and Ilac two schedules of " initial documentation required" and requested that the documentation should be available for inspection and removal following the meeting on the following Monday, 27th July, 1998. Eleven categories of documents were itemised in the two schedules. Some of the categories were of a general nature. For instance, one category related to all financial statements of the relevant company, including draft financial statements and correspondence with the auditors. Another category sought details of all directors", senior staff and employees" remuneration packages, to include details of all benefits in kind, incentive schemes and bonus schemes operated in the relevant company. Other categories were quite specific. For instance, all documentation and records relating to accounts in the Marino branch of the Bank of Ireland, including a specific account, to include statements, cheque book stubs, copy mandates, correspondence and file memoranda, were sought. Another category related to all documentation recording the relationship between Dunnes and two named companies, including purchases transactions, pricing policy, correspondence, invoices, payments and receipts. The schedules also covered the statutory returns which Dunnes and Ilac were obliged to make and the statutory registers of the companies. A copy of the Price Waterhouse Report was also demanded. In the case of all of the categories, other than the category dealing with the statutory registers, the documentation was sought for a period often years ending on 31st December, 1997. A general note at the end of each schedule stipulated that all books, records and documents in writing or other form were covered, including internal memoranda relating to telephone conversations.

5 Following the appointment of Mr. Maloney, he was informed on behalf of Dunnes and Ilac that he might have or might be believed to have a conflict of interest, stemming from the fact that the accountancy firm in which he is a partner, O'Hare and Associates, had acted in a private capacity for Mrs Heffernan's daughter, a beneficial shareholder and a potential beneficial shareholder, as the object of a discretionary trust, in certain companies in the Dunnes Stores Group.

LEAVE TO APPLY BY WAY OF JUDICIAL REVIEW

6 By Order of this Court (O'Higgins J.) made on 4th August, 1998 the Applicants were granted leave to seek various reliefs, which I will outline later, by way of Judicial Review. It was further ordered that the grant of leave would act as a stay on any...