McQUILLIGAN v O'BRIEN
| Jurisdiction | Ireland |
| Judge | Mrs. Justice McGuinness |
| Judgment Date | 22 October 1997 |
| Neutral Citation | [1997] IEHC 193 |
| Docket Number | 1988 No. 12010P |
| Court | High Court |
| Date | 22 October 1997 |
[1997] IEHC 193
THE HIGH COURT
BETWEEN
AND
Citations:
DOWNEY V O'BRIEN 1994 2 ILRM 130
RAFTIS, STATE V LEONARD 1960 IR 381
HARBOURS ACT 1946 S174
LOCAL GOVT (IRL) ACT 1902 S20
LOCAL GOVT (IRL) ACT 1902 S21
LOCAL GOVT (IRL) ACT 1902 S22
LOCAL GOVT (IRL) ACT 1871 S12
Mrs. Justice McGuinness delivered the 22nd day of October 1997
The Judicial Review proceedings before the Court arise from the disposal by Waterford Harbour Commissioners of their shares in a dredging company named Hellebore Limited. The proceedings have been in being for some considerable time, leave to issue Judicial Review proceedings having been granted by this Court by an Order of 19th December, 1988. The Plaintiff herein was at all material times the General Manager of Waterford Harbour Commissioners, but is now retired, and the Respondent is a Local Government Auditor.
When the matter came on for hearing before this Court it was pointed out that parallel proceedings arising out of the same facts had been brought against the same Defendant by the Chairman of Waterford Harbour Commissioners, a Mr. Maurice Downey. The matter had been heard and decided by the learned President of the High Court. In a reserved judgment given on 12th April, 1994 the learned President held in favour of the Defendant. This judgment and Order is under appeal to the Supreme Court but has not yet been heard and decided. For this reason it could well have been desirable to adjourn the present proceedings to await the decision of the Supreme Court. However, having heard the submissions of Counsel on both sides, it appeared to me that the position of the present Plaintiff in relation to the facts of the matter was somewhat different from that of the Chairman of the Commissioners, Mr. Downey. It also seemed undesirable that proceedings which had been in being since 1988 should be yet further adjourned to await an appeal for which no date had yet been fixed. This aspect of the matter was rendered the more urgent by the fact that the Plaintiff, Mr. McQuillan, having retired on the 30th November, 1988, is no longer a young man and further delay in the hearing of his proceedings could well cause hardship and injustice to him. Should the outcome of the present proceedings also give rise to an appeal to the Supreme Court, it may well be possible for the two appeals to be heard conjointly. For these reasons, therefore, I decided to hear the matter.
In 1983 the Waterford Harbour Commissioners entered into a joint venture agreement with a Mr. William O'Hanlon for the dredging of Waterford Harbour. This agreement provided that a company would be established for the purpose, that the Commissioners would own 51% of its issued Capital and that the company would buy a dredger, the MV Lake Lothing, from Mr. O'Hanlon. Pursuant to this agreement a company was incorporated on the 13th April, 1983 called Hellebore Limited. The Commissioners subscribed for and were allotted 10,002 fully paid up £1 shares and Mr. O'Hanlon subscribed for and was allotted 10,000 fully paid up £1 shares. In addition, the parties agreed to make funds available to Hellebore by means of loans and the Commissioners granted a loan of £84,348 interest free to the company. Mr. O'Hanlon also agreed to lend the company a sum of £80,650 also interest free. It appears that these payments were made by way of loan rather than investment for tax reasons. Three years later the Commissioners decided to sell all their shares to Mr. O'Hanlon (for reasons to which I will refer later) and it is that sale which has resulted in these proceedings. A statutory audit of the Commissioners accounts was carried out by a Local Government Auditor. Mr. John C. O'Brien (the Defendant) in the years 1987 to 1988. On 16th November, 1988 pursuant to Section 20 of the Local Government (Ireland) Act. 1902 he charged the sum of £42,300 jointly and severally on the Plaintiff Mr. McQuillan who was General Manager of the Waterford Harbour Commissioners and on the Chairman of the Commissioners, Mr. Maurice E. Downey. Mr. 0'Brien maintained that due to their negligence in selling the Commissioners' shares in Hellebore at less than their true value the Commissioners had suffered a loss of £42,300.
With the document of charge he delivered a further document entitled " Reasons for Charge" which detailed the reasons why the charge was imposed. Pursuant to Section 12 of the Local Government Act 1871, Mr. McQuillan, the Plaintiff, appealed by way of an Application for an Order of Certiorari against the charge imposed on him (as did the Chairman Mr. Downey). As I have already said Mr. Downey's proceedings were heard and decided by the learned President of the High Court in 1994.
In his judgment in Downey -v- O'Brien [1994] 2 IRLM 130 the learned President of the High Court set out the law applicable to this type of proceedings (at pages 134-136 of the Report). Since Counsel both for the Plaintiff and for the Defendant in their submissions to this Court did not appear to differ materially either from each other or from the interpretation of the law set forth by the learned President, and since I respectfully agree with the learned President's clear exposition of this somewhat complex issue, I feel I can do no better than to quote from his judgment. Under the heading " The Law" at page 134 the learned President states:-
"The power of a Local Government Auditor to raise a charge against the Appellant and the Court's jurisdiction to hear an appeal from such a charge are to be found in Section 12 of the Local Government (Ireland) Act, 1871 and Section 20 of the Local Government (Ireland) Act, 1902. Section 20 of the 1902 Act, empowers the Auditor to charge against any member or officer of a Local Authority the amount of any deficiency or loss incurred by his negligence or misconduct and provides that Section 12 of the 1871 Act will apply to every such charge. As the appeal provisions are to be found in Section 12 it is that Section to which attention must firstly be directed. Section 12 of the 1871 Act provides that a Local Government Auditor may examine the matter of every account of a Local Authority and empowers him to disallow any payments which he decides are unfounded and to surcharge the person making or authorising the payments. He is required to certify the amount due by the person charged or surcharged and upon applications stating in writing the reasons for the decision. The Section then goes on to give a right of appeal to a person aggrieved by the charge or surcharge. An aggrieved person may "apply to the Court of Queen's Bench for a writ of Certiorari to remove into the said Court the said ............ surcharge in the like manner and subject to the like conditions as are provided in respect of persons suing for writs of Certiorari for the removal of Orders of Justices of the Peace", but subject to two exceptions, one being that the notice of the intended application is to contain a statement of the matter complained of. On the hearing of the application for the order of Certiorari the Court "shall decide the matter of complaint set forward in such statement and no other" and if it appears to the Court that the decision of the Auditor was erroneous the Court is then empowered to remedy the position."
The Court's powers on the hearing of an Appeal under Section 12 have been subject to some debate. The Section and the authorities which considered it were carefully reviewed by a Divisional Court in State (Raftis) -v- Leonard [1960] IR381 whose conclusions were accurately summarised in the head note of the report as follows:
"The Court, in considering an application for Certiorari under the Provisions of Section 12 of the Local Government (Ireland) Act, 1871, to quash a charge or surcharge made by a Local Government Auditor, is restricted to the materials which were before the Auditor at the time of the audit, but is free, on those materials, to come to a conclusion of fact, as well as of law, different from that come to by the Auditor".
I agree, with respect, with the conclusions of the Divisional Court on the construction of the Section. It follows, therefore, that on this Appeal no fresh evidence can be adduced by either party and that the Court must base its decision on the materials which were before the Auditor, but in order to establish or explain what material was before the Auditor affidavit evidence is permissible. Furthermore, it is clear
(a) that these Certiorari proceedings are not an appeal by way of rehearing but
(b) unlike ordinary Certiorari proceedings the Court may come to a different conclusion on the evidence which was before the Auditor and is not confined merely to considering whether there was evidence to support his findings of fact.
Finally, there is one other point of procedure to be noted. Where the Appellant has filed an Affidavit to support his appeal he may be cross examined on it (see [I960] IR381 at page 420). Where, as in this case, the Auditor does not file an Affidavit but relies on the statement of reasons already given by him it seems to me to be proper that liberty to cross-examine him on that document should, if requested, be granted........
I turn now to the applicable law of negligence. The power to impose a charge on a member of the Local Authority who has acted negligently arises under Section 20 of the 1902 act. The degree of negligence sufficient to justify a charge under the Section has been considered on several occasions in the Courts in this country and in England, authorities collected in and commented on in Keane,...
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