McCaffery v Central Bank of Ireland
| Jurisdiction | Ireland |
| Judge | Mr. Justice Noonan |
| Judgment Date | 03 October 2017 |
| Neutral Citation | [2017] IEHC 546 |
| Date | 03 October 2017 |
| Court | High Court |
| Docket Number | [2016 No. 183 JR.] [2016] 184 JR |
[2017] IEHC 546
THE HIGH COURT
JUDICIAL REVIEW
Noonan J.
[2016 No. 183 JR.]
[2016] 184 JR
AND
AND
Practice and Procedures – S. 33AO(1) of the Central Bank Act, 1942 – Notice of inquiry – Extension of Time – Provision for payment of costs – O.84 of the Rules of the Superior Courts
Facts: The applicants sought an order for quashing the Notice of Inquiry issued by the first name respondent (‘the bank’) against the applicants as directors for committing contraventions of the insurance regulations pursuant to s.33AO of the Central Bank Act, 1942. The applicants sought extension of time for making the delayed application for judicial review and contended that time should have begun to run from the date on which the inquiry members sent the correspondence to the applicants and not from the date on which the decision of the first named respondent was notified to the applicants. The applicants also contended that Part III C of the 1942 Act was unconstitutional as it had no provision for the payment of the applicants' costs of participating in the inquiry. The respondents contended that the present application was premature and the applicants should have awaited the inquiry's determination.
Mr. Justice Noonan dismissed the relief sought by the applicants. The Court stated that the applicants were not entitled for the extension of time. The Court held that the applications were premature and that the applicants had to await the outcome of the inquiry before bringing a challenge of that nature. The Court observed that there was no constitutional infirmity in the administrative sanction procedure (‘ASP’) adopted by the first named respondent against the applicants by virtue of the fact that the applicants might not recover their costs. The Court further held that the proceedings instituted by the applicants constituted an impermissible attack on the unchallenged decisions of the inquiry members and thus an abuse of process of law.
These proceedings arise out of the collapse of Quinn Insurance Limited (‘QIL’). Both applicants were directors of QIL and following its collapse, the first respondent (‘the Bank’) conducted an investigation of QIL with a view to establishing whether or not regulatory breaches had occurred. Arising from that, the activities of the applicants were also examined. This culminated in the service of a Notice of Inquiry by the Bank on the respondents on the 10th November, 2015, whereby the Bank determined to hold an inquiry into whether the applicants had participated in the commission of prescribed contraventions by QIL. In these proceedings, the applicants seek, inter alia, an order quashing the Notice of Inquiry on a variety of grounds.
On the 26th October, 2011, the Bank wrote to the respondents notifying them that the Bank suspected that QIL, being a regulated financial services provider (‘RFSP’) for the purposes of Part IIIC of the Central Bank Act, 1942, as amended, (‘the Act’), may have committed prescribed contraventions for the purposes of s. 33AO(1) of the Act. The respondents were advised that the Bank considered it necessary to examine whether there were reasonable grounds to suspect that they, as persons concerned in the management of QIL between the 10th October, 2005, and the 31st October, 2008, may have participated in the commission of the suspected prescribed contraventions for the purposes of s. 33AO(2) of the Act. Details of the alleged contraventions were provided.
This correspondence was replied to by Messrs. Daniel Spring & Co., solicitors acting on behalf of both respondents. A lengthy chain of correspondence ensued and while it is not necessary to refer to all of this in any detail, it would appear to demonstrate that the applicants and their legal team at an early juncture carried out a detailed analysis of the relevant provisions of the Act and familiarised themselves with it.
The Notice of Inquiry also informed the respondents that the Bank had appointed three persons to conduct the inquiry as inquiry members (‘IMs’) with the chairperson being a former High Court Judge. In a letter of the 23rd December, 2015, Messrs. Spring responded to the Notice of Inquiry with certain observations. The letter appears to demonstrate an awareness of other litigation then ongoing in relation to the provisions of the Act being Fingleton v. Central Bank [2016] IEHC 1, in which judgment was subsequently delivered on the 4th January, 2016.
The letter goes on to make a number of complaints about the inquiry process and the short timeline afforded the applicants to provide a response. The letter complained that the process was entirely oppressive and unreasonable and questioned whether it could be regarded as being in compliance with the applicants' rights under the Constitution. The applicants reserved their rights in that regard, presumably suggesting the potential for a constitutional challenge to the legislation.
A follow up letter was sent by the applicants' solicitors to the Bank on the 24th February, 2016. In this letter, the solicitors suggested that the proposed estimate of ten days for the hearing of the inquiry was very unrealistic. They went on to say:
‘Our clients are very concerned about the question of costs and they have asked us to raise a specific issue with you. Our clients suffered greatly by Quinn Insurance going into administration and we are instructed they would not be in a position to cover the costs of their legal representation at any such inquiry.
On reading s. 33AQ of the Central Bank Act, 1942, our clients are concerned that there appears to be no provision for the inquiry to make a costs order in favour of our clients in respect of the costs of their legal representation. In fact, the section appears to provide that our clients can be fixed with the Central Bank's costs of not just the inquiry but also the investigation.
This seems to be very unfair and irregular and, in our view, unconstitutional. Even if our clients were to be acquitted of the offences alleged against them, there appears to be no facility whereby our clients can seek an order for their costs.
In case our clients have missed or overlooked a section in the Act or a provision in the administrative sanctions procedure, we would be most obliged to hear from you with your confirmation that our clients would be entitled to seek an order that the costs of their legal representation will be paid by the inquiry.’
The letter was immediately replied to by the Bank on the 25th February, 2016, in the following terms:
‘The Inquiry Members have considered your query regarding your clients' costs. As you are aware, Part IIIC of the Act sets out the legislative framework for the conduct of administrative sanctions procedure inquiries. While Part IIIC of the Act provides that persons who are the subject of an inquiry may have legal representation, it does not appear to the Inquiry Members that the Act gives them any power to pay or provide for the payment of the costs of such representation.’
On the 14th March, 2016, the applicants applied to this court (Humphreys J.) for leave to seek a judicial review of the Notice of Inquiry.
The grounds upon which leave was granted may be summarised broadly as follows:
(i) There was unreasonable delay by the Bank in issuing the Notice of Inquiry.
(ii) The Bank has no jurisdiction to conduct an inquiry into the applicants because neither applicant is “a person concerned in the management of QIL” within the meaning of s. 33AR (2) of the Act.
(iii) The Bank is not an appropriate body to conduct the inquiry by reason of apparent bias and/or a perception of bias and because the Bank has prejudged the outcome.
(iv) The inquiry is tainted by a want of fair procedures by virtue of, inter alia, the issuing of new guidelines by the Bank after the event radically altering the procedures by which the inquiry might be conducted. There was a further want of fair procedures by virtue of the Bank constantly amending not only the rules but the prescribed contraventions.
(v) Part IIIC of the Act and in particular certain identified sections within that Part are unconstitutional as representing an impermissible exercise of judicial power.
(vi) Part IIIC of the Act is further unconstitutional because it contains no provision for the payment of the applicants' costs of participating in the inquiry.
In relation to the last ground, it is relevant to note that it was advanced, and leave was granted, on the following basis as appears in the statement of grounds:
‘69. There is no provision for the payment of any costs to the applicant, even if the inquiry is abandoned or all charges are dismissed. Unfairly, the inquiry can order the costs of the inquiry itself and the costs of the investigation against the applicant. The applicant suffered greatly as a result of Quinn Insurance Ltd going into administration and he is not in a position to cover the costs of his legal representation for such an inquiry. Given the nature of the issues, the breadth and complexity of the issues concerned, the material pertaining to the inquiry and the probable/possible length of the inquiry it is likely that the costs involved for the Applicants' representation will be enormous.’
This ground is contained in identical terms in the statement of grounds of both applicants.
It is relevant to note that this latter ground is clearly one of oppression based on the alleged fact that neither applicant can from their own resources fund the costs of legal...
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