Independent News and Media Plc v Director of Corporate Enforcment

• Jurisdiction: Ireland
• Judge: Mr. Justice Noonan
• Judgment Date: 01 June 2018
• Neutral Citation: [2018] IEHC 319
• Docket Number: [2018 No. 300 J.R.]
• Court: High Court
• Date: 01 June 2018

BETWEEN

INDEPENDENT NEWS

AND

MEDIA PLC

APPLICANT

AND

THE DIRECTOR OF CORPORATE ENFORCMENT

RESPONDENT

[2018] IEHC 319

[2018 No. 300 J.R.]

THE HIGH COURT

JUDICIAL REVIEW

Judicial review – Appointment of inspectors – Right to fair procedures – Applicant seeking judicial review – Whether the respondent was obliged to consult with the applicant prior to making an application to the High Court for the appointment of inspectors

Facts: The applicant, Independent News and Media plc, in judicial review proceedings, sought to quash the decision of the respondent, the Director of Corporate Enforcement, to make an application to the High Court for the appointment of inspectors pursuant to s. 748 of the Companies Act 2014. The essential issue that arose for determination by the High Court was whether the respondent was obliged to consult with the applicant prior to making the application. By order of the President, the matter proceeded before Noonan J as a “telescoped” hearing, that is to say the application for leave to seek judicial review and the substantive application for judicial review were heard together. The applicant contended that because of the potential adverse impact of the inspectorate application on the applicant, it was entitled to notice of the respondent’s intention to make the application and thereafter the opportunity to make representations and/or submissions before the application was brought. It was said that the respondent’s failure to afford that opportunity amounted to a breach of natural and/or constitutional justice and the applicant’s right to fair procedures.

Held by Noonan J that the applicant's case was not exceptional or unique such that it fell outside the relevant authorities. Noonan J held that any damage allegedly suffered by the applicant was but an incident of incorporation, the consequences of which, both positive and negative, must be accepted by the applicant.

Noonan J held that while he was satisfied that the applicant had made out a sufficiently arguable case to meet the low threshold of obtaining leave to seek judicial review, on the substantive issue, he would dismiss the application.

Application dismissed.

JUDGMENT of Mr. Justice Noonan delivered on the 1st day of June, 2018

Introduction

1 Was the respondent obliged to consult with the applicant prior to making application to the High Court for the appointment of inspectors pursuant to s. 748 of the Companies Act 2014 (‘the 2014 Act’)? That is the essential issue that arises for determination in these judicial review proceedings by which the applicant seeks to quash the decision of the respondent to make such application. By order of the President, the matter proceeded before me as a ‘telescoped’ hearing, that is to say the application for leave to seek judicial review and the substantive application for judicial review were heard together.

Relevant Facts

2 The applicant is a public limited company which has been described as the largest media organisation in the State. It publishes a number of well-known newspapers. It directly employs over 800 people and has over 7,800 shareholders.

3 In November, 2016, the applicant's Chief Executive Officer, Robert Pitt, made a number of protected disclosures first to a director of the applicant and subsequently on 18th November, 2016 to the respondent. Among the allegations of wrongdoing within the applicant company made by Mr. Pitt was a claim that he had been put under improper pressure by Leslie Buckley, the applicant's then Chairman, to influence the price to be paid by the applicant to acquire Newstalk, a radio station owned by Communicorp and in respect of which there had been discussions between the applicant and Communicorp for its purchase. A further claim by Mr. Pitt related to the sale by the applicant of its interest in an Australian media company called APN. Mr. Pitt alleged that there had been an improper attempt made by Mr. Buckley to procure a payment to a party called Island Capital in the nature of a success fee, from the proceeds of the sale of the applicant's shares in APN.

4 Arising from this disclosure, the respondent commenced an investigation into the affairs of the applicant. This investigation was underway for a number of months when on the 10th August, 2017, Mr. Pitt made a further protected disclosure to the respondent which has been referred to as the ‘Data Interrogation Issue’. This concerned the removal in 2014 of a large quantity of tapes containing data from the applicant's IT system out of the jurisdiction where they were subjected to analysis by a company in the United Kingdom. This was done at the behest of Mr. Buckley without the knowledge of Mr. Pitt or the Board of the applicant.

5 Mr. Pitt in his disclosure alleged that the applicant's Head of IT had been expressly instructed by Mr. Buckley not to disclose this event to Mr. Pitt. Mr. Buckley subsequently offered the explanation to the Board that this had been done as part of a cost saving exercise particularly in relation to one specific contract for the supply of legal services, about which there was said to be some lack of clarity. It subsequently emerged that the invoice for this work was discharged by a third party company unrelated to the applicant.

6 In the course of his investigation, the respondent in October, 2017 obtained from an individual involved in the removal of the data a spreadsheet document which suggested that targeted searches of the data in question had been conducted in relation to 19 individuals identified as ‘persons of interest’. This document suggested that the explanation given by Mr. Buckley to the Board of the applicant of the circumstances of the Data Interrogation Issue was not correct. Of importance, the applicant says that it never saw or was aware of this document prior to the application by the respondent to the High Court for the appointment of inspectors. That application was made by the issuing of a notice of motion on 23rd March, 2018 and currently stands adjourned pending the outcome of this judicial review.

7 In the course of his investigation, the respondent made 14 statutory requirements for information and documents pursuant to s. 778 of the 2014 Act. The applicant complied with all of these, as it was obliged to on pain of criminal sanction. The applicant says that it had no notice of either the fact that the respondent intended to make the court application or that he had concluded his investigation. Both of these matters came as a surprise to the applicant. It should be noted that the Data Interrogation Issue is also now the subject of an investigation by the Data Protection Commissioner.

8 In the affidavit grounding this application sworn by Leonard O'Hagan, a director of the applicant, he avers that the applicant received no notice of the concerns identified by the respondent following the completion of his investigation and had such concerns been identified, they could have been addressed by the applicant. Dr. O'Hagan avers that this has had a damaging effect on the applicant. In the context of the Data Interrogation Issue, he avers at para. 17:

‘As I have explained below, in circumstances where INM is a media organisation, its ability to control and protect data is hugely important to its reputation and the fact that it was deprived of the opportunity to address these issues in advance of the inspectorate application being made has had damaging consequences for its reputation.’

9 Elsewhere in his affidavit, Dr. O'Hagan identifies other adverse impacts on the applicant of the respondent's decision to make the inspectorate application. These include a risk of disruption to the conduct of the applicant's business, the likelihood of damage to the applicant's reputation, business and shareholder value and the fact that the respondent's failure to notify the applicant of the issues surrounding the spreadsheet deprived it of the opportunity of notifying the individuals concerned and the Data Protection Commissioner. In particular, the applicant relies on an expert affidavit of Kim Greene which offers the view that the applicant's share price has been adversely affected by the making of the inspectorate application. In his second affidavit, Dr. O'Hagan also refers to the fact that the making of the inspectorate application has caused disquiet amongst the applicant's shareholders, employees and other stakeholders.

The Applicant's Case

10 As pleaded in its statement of grounds, the applicant contends that because of the potential adverse impact of the inspectorate application on the applicant, it was entitled to notice of the respondent's intention to make the application and thereafter the opportunity to make representations and/or submissions before the application was brought. It is said that the respondent's failure to afford that opportunity amounts to a breach of natural and/or constitutional justice and the applicant's right to fair procedures.

11 There is a separate plea to the effect that the respondent failed to take relevant considerations into account before applying to the court. Those considerations are said to be the information that would have been made available by the applicant had it been consulted and so this ground is in reality a sub category of the primary ground. In its written submissions, the applicant argues that the decision to bring the inspectorate application is amenable to judicial review being a discretionary decision taken by a public body pursuant to a statutory power with the potential to adversely affect the rights and interests of the applicant. Although the applicant concedes that in general the right to fair procedures is not triggered at a preliminary investigation stage where such procedures are available at a later stage, there are exceptions and each case is fact specific. The facts here are such that fairness required a...