Ernst & Young v Purcell & Institute of Chartered Accountants in Ireland

• Jurisdiction: Ireland
• Court: High Court
• Judge: Ms. Justice Mary Irvine,
• Judgment Date: 13 May 2011
• Neutral Citation: [2011] IEHC 203
• Date: 13 May 2011

Ernst & Young v Purcell & Institute of Chartered Accountants In Ireland

BETWEEN

ERNST & YOUNG

APPLICANT

AND

JOHN PURCELL AND THE INSTITUTE OF CHARTERED ACCOUNTANTS IN IRELAND

RESPONDENTS

[2011] IEHC 203

[No. 330 J.R./2011]

THE HIGH COURT

JUDICIAL REVIEW

Practice and procedure

Leave application - Standard of proof - Application on notice - Arguable grounds - Investigation by respondents into conduct of applicant - Applicant's role as auditor - Objection to appointment - Validity of appointment - Complaint - Delay - Extension of time - Natural justice - Fair procedures - Legitimate expectations - Rights of party in disciplinary investigation - Limitation of rights at preliminary stage of investigation - Whether appointment ultra vires powers of second respondent - Whether valid complaint under Bye-Laws - Whether arguable case - Whether higher standard of proof required where respondent on notice - Whether good reason to extend time - Whether disciplinary procedure unfair - Whether legitimate expectation - Whether applicant out of time - Mass Energy v Birmingham County Council [1994] Env LR 298; O'Brien v Moriarty [2005] IESC 32, [2006] 2 IR 221; G v DPP [1994] 1 IR 374; McNamara v An Bord Pleanala (No 1) [1995] 2 ILRM 125; Potts v Minister for Defence [2005] IEHC 72, [2005] 2 ILRM 517; Gorman v Minister for Environment [2001] 1 IR 306; Irish Harmophilia Society v Lindsay (Unrep, HC, Kelly J, 16/5/2001); Solan v DPP [1989] ILRM 491; De Róiste v Minister for Defence [2001] 1 IR 190; Dekra Éireann Teo v Minister for the Environment [2003] 2 IR 270; O'Callaghan v Disciplinary Tribunal [2002] 1 IR 1; Ó Ceallaigh v An Bord Altranais [2000] 4 IR 54; Webb v Ireland [1988] IR 353; Glencar Exploration v Mayo County Council (No 2) [2002] 1 IR 84; Re "La Lavia" [1996] 1 ILRM 194 considered - C(D) v DPP [2005] IESC 77, [2005] 4 IR 281 followed - Rules of the Superior Courts 1986 (SI 15/1986) O 84, r 21(1) - Leave refused (2011/330JR - Irvine J - 13/5/2011) [2011] IEHC 205

Ernst & Young v Purcell & ICAI

RSC O.84 r21

MASS ENERGY LTD v BIRMINGHAM CITY COUNCIL 1994 ENV LR 298

O'BRIEN v MORIARTY 2006 2 IR 221 2005 2 ILRM 321 2005/45/9458 2005 IESC 32

G v DPP & DISTRICT JUDGE KIRBY 1994 1 IR 374 1994/3/724

MCNAMARA (KILL RESIDENTS GROUP) v BORD PLEANALA (NO 1) 1995 2 ILRM 125 1995/3/1122

POTTS v MIN FOR DEFENCE 2005 2 ILRM 517 2005/51/10674 2005 IEHC 72

GORMAN & ORS v MIN FOR ENVIRONMENT & ORS 2001 1 IR 306 2000/10/3663

IRISH HAEMOPHILIA SOCIETY LTD v JUDGE LINDSAY & BLOOD TRANSFUSION SERVICE BOARD UNREP KELLY 16.5.2001 2001/12/3358

C (D) v DPP 2005 4 IR 281 2006 1 ILRM 348 2005/8/1599 2005 IESC 77

RSC O.84 r21(1)

SOLAN v DPP & DISTRICT JUSTICE WINE 1989 ILRM 491 1988/10/3025

RSC O.84 r4

DE ROISTE v MIN FOR DEFENCE & ORS 2001 1 IR 190 2001 2 ILRM 241 2001 ELR 33 2001/6/1371

DEKRA EIREANN TEORANTA v MIN FOR ENVIRONMENT 2003 2 IR 270 2003 2 ILRM 210 2003/12/2484

RSC O.84

O'DONNELL v DUN LAOGHAIRE CORP 1991 ILRM 301 1990/8/2084

RSC O.84A r4

O'CALLAGHAN v DISCIPLINARY TRIBUNAL & ORS 2002 1 IR 1 2002 1 ILRM 89 2001/18/5106

O CEALLAIGH v BORD ALTRANAIS 2000 4 IR 54 2000/2/648

WEBB v IRELAND & AG 1988 IR 353

GLENCAR EXPLORATION PLC & ANDAMAN RESOURCES PLC v MAYO CO COUNCIL (NO 2) 2002 1 IR 84

KING & CHAPMAN v LA LAVIA 1999 3 IR 476 1996 1 ILRM 194 1995/9/2620

1 Judgment of Ms. Justice Mary Irvine, dated the 13th day of May, 2011

2 1. This is an application for leave to apply for judicial review of certain decisions made by the first and second named respondents in the course of their current investigation into the role of the applicant as auditor of Anglo Irish Bank plc during a period of financial irregularity. The ex parte application initially came before the President of the High Court on 15 ^th April, 2011. He directed that the respondents be put on notice of the application. Consequently, the matter came before me on 18 ^th April, 2011 when the court heard submissions from both parties as to the relief sought.

3 2. Pursuant to the Bye-Laws of the second named respondent and the disciplinary procedures stipulated therein, the second named respondent appointed the first named respondent as Special Investigator into the relevant affairs and conduct of the applicant. The applicant objects to the appointment of the first named respondent as ultra vires the powers of the second named respondent under the relevant Bye-Laws and seeks an order of certiorari quashing the decision underlying the appointment. Alternatively, the applicant seeks a number of other reliefs which can be summarised as follows, namely:-

4 (i) a declaration that the first named respondent discharge his functions in accordance with natural justice and fair procedures and in accordance with the applicant's legitimate expectations;

5 (ii) an order of mandamus requiring the first named respondent to furnish a report to the applicant containing his proposed findings and the evidence, facts and matters relied upon in support of any opinion that there is a prima facie case that the applicant is liable to disciplinary action;

6 (iii) a declaration that the applicant's rights include the right to make submissions in relation to the proposed findings;

7 (iv) an order of mandamus directing the first named respondent to produce all material, documents and transcripts of interviews relevant to his investigation; and

8 (v) a declaration that in the event of the first named respondent finding a prima facie case exists that the supporting material to be furnished with his report to the second named respondent should exclude any report compiled by third party advisers.

9 3. Finally, if necessary, the applicant seeks an extension of time to maintain the within proceedings pursuant to O. 84, r. 21 of the Rules of the Superior Courts.

10 4. The respondents submit that the applicant has not made out an arguable case in respect of any of the grounds of relief sought and that the court should refuse to grant it leave to pursue any remedy. In addition, in respect of each relief sought, the respondents maintain that the application to this Court has been brought outside the timeframe provided for by O. 84, r. 21 and that in the circumstances of this case the court should not exercise its discretion to extend that time limit.

The appropriate test for the present leave application which was on notice to the respondents

11 5. Mr. Sreenan, S.C., on behalf of the applicant submitted that the appropriate threshold to be applied by the court on the present application was that it should be satisfied that the applicant had made out an arguable case in relation to each of the grounds in respect of which leave was sought.

12 6. Mr. McCullough, S.C., having advised the court that there was a line of authority which suggested that an argument could be made that a higher standard of proof should be applied on an ex parte application where the respondent was on notice, stated that he was not going to argue the issue. I have presumed, in this regard, that what Mr. McCullough was referring to was the line of authority which emanates from the decision of the Court of Appeal in Mass Energy v. Birmingham County Council [1994] ENV LR 298 where, on a leave application on notice, the court concluded that the applicant had to prove not merely an arguable case but that it was one which had a strong chance of succeeding. This approach was not favoured by the majority of the Supreme Court in O'Brien v. Moriarty [2005] 2 ILRM 321, with Kearns J. being the only member of the court in favour of applying a higher threshold to an ex parte leave application made on notice to the respondent.

13 7. Having stated that he was not going to argue the issue of the applicable standard, Mr. McCullough, S.C., nonetheless proceeded to make his submissions based on an onus of proof requiring the applicant to prove that his case was "reasonable, arguable and weighty". That is a standard of proof a little higher than that contended for by the applicant and is one which is normally confined to cases of statutory judicial review.

14 8. It appears to be almost settled law that there are two standards applicable in judicial review leave applications which can be summarised as follows:-

15 (i) In an ex parte application for leave to grant judicial review of a conventional nature, the standard is as set out by Denham J. in G. v. Director of Public Prosecutions [1994] 1 I.R. 374:-

"The burden of proof on an applicant to obtain liberty to apply for judicial review under the Rules of the Superior Courts O. 84, r. 20 is light. The applicant is required to establish that he has made out a statable case, an arguable case in law."

16 (ii) There are a number of statutory schemes which require an applicant seeking leave to challenge designated decisions to place a specified person or body on notice of the making of such application creating an inter partes hearing at the initial filtering phase. The relevant statutory threshold for granting leave in such cases appears to be raised from "arguable grounds" to "substantial grounds", the test first addressed by Carroll J. in McNamara v. An Bord Pleanála (No. 1) [1995] 2 ILRM 125 and which standard requires the applicant to prove that its case is reasonable, arguable and weighty.

17 9. There is still some uncertainty surrounding the standard of proof to be applied in a conventional non-statutory leave application where the respondent has been put on notice of the application. Clarke J. in Potts v. Minister for Defence [2005] 2 ILRM 517 favoured the application of the statutory judicial review threshold in such circumstances and rejected the even higher threshold adopted by the Court of Appeal in Mass Energy. Also, Kelly J. in Gorman v. Minister for Environment ...