Karl Brophy v Independent News and Media Plc

• Jurisdiction: Ireland
• Judge: Mr. Justice Garrett Simons
• Judgment Date: 01 December 2021
• Neutral Citation: [2021] IEHC 713
• Docket Number: 2019 No. 6358 P
• Court: High Court

Between

Karl Brophy

Gavin O'Reilly

Plaintiffs

and

Independent News and Media Plc

Leslie Buckley

Defendants

[2021] IEHC 713

2019 No. 6358 P

THE HIGH COURT

Appearances

Oisín Quinn, SC (with Hugh McDowell) for the plaintiffs instructed by Eugene F. Collins

Barbara O'Neill (with Eoin McCullough, SC) for the first named defendant instructed by Matheson

Brian Gageby for the second named defendant instructed by A & L Goodbody

JUDGMENT of Mr. Justice Garrett Simons delivered on 1 December 2021

INTRODUCTION

1 This judgment is delivered in respect of an application to stay the within proceedings pending the conclusion of an investigation under Part 13 of the Companies Act 2014. The investigation is being carried out by two court appointed inspectors.

2 The application for a stay has been brought by the first named defendant, Independent News and Media plc. The application is advanced on the basis that there is a significant overlap, if not complete identity, between the legal issues which supposedly fall to be “ determined” by the inspectors, on the one hand, and by the High Court in the within proceedings, on the other.

APPOINTMENT OF THE INSPECTORS

3 The affairs of Independent News and Media plc (“ the Company”) are the subject of an ongoing investigation under Part 13 of the Companies Act 2014 (“ the statutory investigation”). The High Court (Kelly P.) had, by order dated 6 September 2018, appointed Mr. Sean Gillane, SC, and Mr. Richard Fleck, CBE, as inspectors pursuant to Section 748 of the Companies Act 2014 and Order 75B, rule 3(1) of the Rules of the Superior Courts (as amended).

4 The application to appoint the inspectors had been initiated by the Director of Corporate Enforcement by originating notice of motion dated 23 March 2018. The application had been strongly opposed by the Company. The application was heard over three days in July 2018, and Kelly P. delivered a detailed written judgment on 4 September 2018, Director of Corporate Enforcement v. Independent News and Media plc [2018] IEHC 488; [2019] 2 I.R. 363 (“ the principal judgment”).

5 The principal judgment explains that the Director of Corporate Enforcement had identified a number of issues of concern, and in reliance upon which he sought the appointment of inspectors by the court. One of these issues is referred to in the principal judgment by the shorthand the “ data interrogation” issue. The issue is described as follows at paragraphs 19 to 23 of the principal judgment.

“In 2014, back-up tapes of computer data were removed from the company's premises. They were taken to the premises of a company outside the jurisdiction. There, that data was interrogated over a period of some months. This operation was directed by Mr. Buckley. Other members of the board were not aware of this operation at that time. It is alleged that Mr. Buckley expressly instructed the company's head of I.T. not to disclose the matter to Mr. Pitt. During the course of the interrogation, tapes and associated data appear to have been accessible to and accessed by a range of individuals who are external to the company. These individuals have business links with Mr. Buckley, with each other and appear also to have links with Mr. O'Brien.

This exercise was, according to Mr. Buckley in responses which he gave to the Director on foot of statutory demands for information, part of a cost-reduction exercise in respect of a contract which the company had with Simon McAleese Solicitors, for the provision of legal services. Under the terms of that contract, Mr. McAleese was guaranteed an annual fee of approximately €650,000 and the contract had a five-year duration. It was due to expire in 2016. The chairman indicated he thought that that was a very significant fee and an open-ended contract. Because he said he found it difficult to obtain information on the contract, he felt that he needed to access emails and documentation stored on the company's system.

During the course of the interrogation, data appears to have been searched against the names of no fewer than 19 individuals. They included the journalists Rory Godson, Maeve Sheehan, Brendan O'Connor and Sam Smyth; two members of the Inner Bar, Jeremiah Healy S.C. and Jacqueline O'Brien S.C.; former board and staff members of the company including Joe Webb (former chief executive of the company's Irish division), Karl Brophy (former director of corporate affairs of the company), Mandy Scott (former personal assistant to the chief executive), Vincent Crowley (former chief executive of the company), Donal Buggy (former director and chief financial officer of the company) and the late Mr. James Osborne (former chairman of the company). Also included were Messrs. Andrew Donohue, Mark Kenny, Jonathan Neilan, Harriet Mansergh, Jenny Kilroy, Nick Cooper and Ann Marie Healy.

It is difficult to see what the interrogation of information concerning at least some of those persons had to do with a cost-reduction exercise in respect of the legal services being provided by Mr. McAleese. The Director points out that both senior counsel who were the subject of the interrogation acted for several years as counsel to the inquiry into payments to politicians and related matters presided over by Mr. Justice Moriarty. That tribunal was involved in investigations into allegations relating to the awarding of the second GSM licence to Esat which is an entity controlled by Mr. O'Brien. Indeed, in their letter of 30 April 2018 to Mr. Buckley the company's solicitors described the names of those searched against as persons who may be regarded as having acted adversely to Mr. O'Brien. The rights and entitlements of some or all of these 19 people may have been transgressed in a most serious way by this activity.

The costs of this data interrogation exercise were not discharged by the company. The bills for it were presented to an entity controlled by Mr. O'Brien called Island Capital and were paid by an Isle of Man company called Blaydon Ltd. Mr. O'Brien is the beneficial owner of Blaydon Ltd. The company does not know why Blaydon Ltd. discharged the costs associated with this data interrogation. According to Island Capital, Blaydon Ltd. acts as paying agent for Mr. O'Brien and his companies.”

6 The nineteen individuals identified in the principal judgment have come to be referred to by the shorthand “ the INM 19”. The names of these nineteen individuals appear on a spreadsheet discovered by the Office of the Director of Corporate Enforcement as part of its own investigations, i.e. prior to the appointment of the two inspectors by the High Court. This spreadsheet has been exhibited as part of the affidavit of Mr. Ian Drennan sworn on 23 March 2018.

7 The inspectors are required, as part of their terms of reference, to investigate the data interrogation issue. In particular, the inspectors are to investigate and report upon:

• (i). the fact of and circumstances concerning the data interrogation;

• (ii). the reasons for and the purposes of the data interrogation;

• (iii). the knowledge of the company's directors (the directors) of the data interrogation;

• (iv). the results of the data interrogation;

• (v). payment for the data interrogation;

• (vi). the persons for whose benefit the data interrogation was conducted;

• (vii). the adequacy of the directors' response to notification of the data interrogation, including their investigation of the same and engagement with the Data Protection Commissioner.

THE PRESENT PROCEEDINGS

8 The Plaintiffs in the within proceedings, Messrs. Karl Brophy and Gavin O'Reilly, are both potentially affected by the data interrogation issue.

9 Mr. Brophy had worked as a journalist with both the Irish Examiner and Independent Newspapers. Between January 2011 and October 2012, Mr. Brophy had been employed as the Company's director of corporate affairs. Mr. Brophy is one of the nineteen individuals subject to the “ data interrogation” exercise.

10 Mr. O'Reilly had worked in a number of roles within the Company. Mr. O'Reilly had become the chief executive officer of the group of companies in 2009, and had remained in that position until April 2012. Although Mr. O'Reilly is not one of the so-called INM 19, his former personal assistant, Ms. Mandy Scott, is one of the nineteen individuals subject to the “ data interrogation” exercise.

11 Prior to the institution of the within proceedings, the (then intended) Plaintiffs brought an application in 2019 seeking to be allowed to use the documentation, which they had received in the context of the application to appoint the inspectors, for the purpose of other proceedings.

12 Kelly P. delivered a written judgment on this application on 27 June 2019, In the matter of Independent News and Media plc [2019] IEHC 467 (“ the documentation judgment”). It is explained in the judgment that Messrs. Brophy and O'Reilly wished to bring proceedings against the Company, and possibly other parties, arising from the data interrogation. The intended proceedings would be framed in terms of alleged breaches of their right to privacy and of their rights under the data protection legislation; breach of constitutional rights; and a conspiracy to damage their interests.

13 Kelly P. considered that the application to use the documentation for the purpose of the intended proceedings should be determined by reference to principles analogous to those that govern the use of documents which have been obtained by way of discovery in legal proceedings. A party who gains access to documentation by way of discovery is subject to an implied undertaking to use that documentation only for the purpose of those particular proceedings. A court has discretion to release a party from this implied undertaking in special circumstances.

14 Kelly P. held that there were special circumstances which justified allowing the use of the documentation, and...