Minister for Enterprise, Trade and Employment v Gannon

JurisdictionIreland
JudgeMr. Justice Aindrias Ó Caoimh
Judgment Date19 November 2002
Neutral Citation2003 WJSC-HC 2645
Date19 November 2002
Docket Number[No. 1617 S.S./2001],[2001 No. 1617 S.S.]
CourtHigh Court

2003 WJSC-HC 2645

THE HIGH COURT

[No. 1617 S.S./2001]
DIRECTOR OF CORPORATE ENFORCEMENT v. GANNON & ORS T/A GILROY GANNON CHARTERED ACCOUNTANTS
IN THE MATTER OF SECTION 2 OF THE SUMMARY JURISDICTION ACT, 1858 AS EXTENDED BY S.51 OF THE COURTS SUPPLEMENTAL PROVISIONS) ACT, 1961

Between:

THE DIRECTOR OF CORPORATE ENFORCEMENT
Appellant

and

JOSEPH TIMOTHY GANNON
First Respondent
-and-
DECLAN GILROY, BRYAN KILFEATHER., ALAN J. PALMER., CATHAL ANTOINE O'DONNELL, PAUL G. HORAN and KENNETH McMORELAND Practicing under the style of Gilroy Gannon, Chartered Accountants
Remaining Respondents

Citations:

COMPANY LAW ENFORCEMENT ACT 2001 S14(4)

COMPANIES ACT 1963 S370

COMPANIES ACT 1990 S187(2)

COMPANIES ACT 1990 S187(6)

COMPANIES ACT 1963 S160

COMPANIES ACT 1963 S160(9)

COMPANIES ACT 1963 PART V

COMPANIES (AMDT) ACT 1986 S5

COMPANIES (AMDT) ACT 1986 S18

COMPANIES ACT 19901990 PART 10

EEC DIR 84/253

COMPANIES ACT 1990 (COMMENCEMENT) ORDER 1992 SI 258/1992

COMPANIES ACT 1990 (AUDITORS) REGS 1992 SI 259/1992

COMPANIES ACT 1990 S187

COMPANIES ACT 1990 S188

COMPANIES ACT 1990 S189

COMPANIES ACT 1990 S191

COMPANIES ACT 1990 S192

COMPANIES ACT 1990 S199

COMPANIES ACT 1990 S200

COMPANIES ACT 1963 S162

COMPANIES ACT 1963 S163

COMPANIES ACT 1990 S6

COMPANIES ACT 1963 S162(3)(B)

DAVIES V HARVEY 1874 LR 9 QB 433

CLODE V BARNES 1974 1 WLR 544

EMPLOYMENT EQUALITY BILL 1996, IN RE 1997 2 IR 321

COMPANIES ACT 1989 S28

COMPANIES ACT 1989 S28(5)

SECRETARY FOR STATE TRADE & INDUSTRY V HART 1982 1 WLR 481 1 AER 817

COMPANIES ACT 1976 S13(5)

COMPANIES ACT 1990 S183

COURTS (SUPPLEMENTAL PROVISIONS) ACT 1961 S52

COMPANIES ACT 1963 S2

COMPANIES ACT 1963 S128(1)(B)

COMPANIES ACT 1963 S156(1)

COMPANIES ACT 1963 S157

COMPANIES ACT 1963 S158(1)

COMPANIES ACT 1963 S159

COMPANIES ACT 1963 S160(1)

COMPANIES ACT 1963 S160(2)

COMPANIES ACT 1963 S160(2)(A)

COMPANIES ACT 1990 S185

COMPANIES ACT 1990 S186

COMPANIES ACT 1990 S185(3)(A)

COMPANIES ACT 1990 S187(1)

COMPANIES ACT 1990 S187(2)(A)

COMPANIES ACT 1990 S187(2)(B)

COMPANIES ACT 1990 S187(7)

COMPANIES ACT 1990 S187(9)

COMPANIES ACT 1990 S193

COMPANIES ACT 1986 S15

EEC DIR 84/253 ART 23

EEC DIR 84/253 ART 24

EEC DIR 84/253 ART 25

EEC DIR 84/253 ART 3–19

EEC DIR 84/253 ART 1(1)

COMPANIES (AMDT) ACT 1986 S18(3)

GAMMON (HONG KONG) LTD V AG OF HONG KONG 1985 AC 1

R V BROCKLEY 99 CAR 385

COMPANIES DIRECTORS DISQUALIFICATION ACT 1986 S11 (UK)

LIM CHIM AIK V THE QUEEN 1963 AC 160

EMPLOYMENT EQUALITY BILL 1996 S15

TRADE DESCRIPTIONS ACT 1968 (UK)

COMPANIES (AMDT) ACT 1982 S13(1)(A)

USSHER COMPANY LAW IN IRELAND (1986) 373

COMPANIES ACT 1990 S187(2)(D0

LINDLEY PARTNERSHIP 18ED 427

TWOMEY PARTNERSHIP LAW IN IRELAND PAR 10.96

SHANNON REGIONAL FISHERIES BOARD V CAVAN CO COUNCIL 1996 3 IR 267

SWEET V PARSLEY 1970 AC 132

Synopsis:

COMPANY LAW

Company law enforcement

Case stated

Prosecution - Acting as auditor when disqualified - Whether District Court Judge erred in law in dismissing prosecutions - Company Law Enforcement Act, 2001 (2001/1617SS - O Caoimh J - 19/11/2002)

Minister for Enterprise, Trade and Employment v Gannon - [2002] 4 IR 439

This was an appeal by way of case stated from a decision of the District Court. The Minister preferred charges against the defendants pursuant to the Company Law Enforcement Act, 2001. The opinion of the court was requested on inter alia whether the judge was correct in law on the evidence in deciding that the defendant had no case to answer that he had acted as an auditor when he was not qualified.

Held by O'Caoimh J. in answering the case stated in the negative that the District Court judge erred in law in dismissing the prosecutions against the defendants. The judge erred in law in concluding that it was necessary to establish mens rea in the context of the charges. The issue was not who was appointed as auditor but rather whether any person acted as auditor

1

Judgment of Mr. Justice Aindrias Ó Caoimh delivered the 19th day of November, 2002 .

2

This is an appeal by way of case stated from a decision of Judge Oliver McGuinness of the District Court assigned to the District Court area of Sligo, District No. 2. The case stated indicates that the learned judge of the District Court heard charges preferred by the Minister for Enterprise, Trade and Employment against the defendants. These proceedings have been maintained in the name of the appellant the Director of Corporate Enforcement having regard to the provisions of s. 14 (4) of the Company Law Enforcement Act, 2001.

3

The summonses set forth complaints against the first defendant:

4

(a) that on or about the 3rd day of December, 1997 at Stephen Street, Sligo, within the said District Court area, you did act as auditor of a company registered under the Companies Acts 1963to 1990 viz. Sligo County Enterprise Fund with company registration number 129485 at a time when you were disqualified by section 187 (2) of the Companies Act, 1990in that you were then an officer, i.e. Director, of the same company, contrary to s.187 (6) of the Companies Act, 1990

5

(b) that on or about the 3rd day of December, 1997 at Stephen Street, Sligo, within the said District Court area, you did act as auditor of a company registered under the Companies Acts 1963to 1990 viz. Brodericks Limited with company registration number 14472 at a time when you were disqualified by section 187 (2) of the Companies Act, 1990in that you were then an officer, i.e. Director, of the same company, contrary to section 187 (6) of the Companies Act, 1990and as against the remaining defendants:

6

(c) that on or about the 3rd day of December, 1997 at Stephen Street, Sligo, within the said District Court area, as partners of a firm practising under the style and title Gilroy Gannon, Chartered Accountants, Registered auditors, you acted as auditors of Sligo County Enterprise Fund, being a company registered under the Companies Acts, 1963to 1990, you were not qualified for appointment as auditors in that Joseph Timothy Gannon another partner of the said firm Gilroy Gannon was an officer, i.e. director of the same company and contrary to section 187 (6) of the Companies Act, 1990.

7

The case stated recites that the learned judge heard evidence from the prosecution by way of oral testimony and documents proved in accordance with s. 370 of the Companies Act, 1963in relation to the charge against the defendants. It is indicated that Garda John McHale also gave evidence of statements made to him by the defendants, which statements are annexed to the case stated. The documentation pertaining to Sligo County Enterprise Fund (hereinafter referred to as "the company") proved in evidence, included the Certificate of Incorporation, the Memorandum and Articles of Association, Form A1, being the statement of the secretary and directors and the situation of the registered office with the consent in writing and signature of the first defendant to act as Director of 23rd November, 1987 and Form B1s, being annual returns of the company, together with particulars of the first defendant as Director and the auditor's report dated the 3rd December, 1997 and printed on the letterhead of Gilroy Gannon, Chartered Accountants and Registered auditors and signed by them. Particular attention was brought to the attention of the District Court to page 15 of the Annual Accounts audited by Messrs Gilroy Gannon and Schedule III, administrative expenses, containing an entry for audit and accountancy expenses for the year ended 30th September, 1997 and for the previous year showing expenses paid to Messrs Gilroy Gannon. The documentation in question is annexed to the case stated.

8

The company is a company limited by guarantee and as such was prohibited from making any payment to its directors including the first defendant as a director.

9

The case stated recites at para. 14 thereof the nature of the submissions made on behalf of the defendants to the District Court and these are as follows:

10

(a) No definition of the word "auditor" was provided in the Companies Acts;

11

(b) Since any large company such as a bank or a public body could well have persons described as "internal auditors" and since it could not be suggested that such persons committed the criminal offence of infringing s. 187(6), the word auditor must have a particular meaning in the context of Company Law;

12

(c) This meaning had to include the proposition that he/she was a person appointed by the members in general meetings in the manner set out in the Companies Acts to protect their interests and the interests of creditors and to carry out the specific statutory obligations imposed on auditors;

13

(d) It followed therefore that a person could not be an auditor unless properly appointed in accordance with the Companies Acts;

14

(e) Mr. Armstrong, counsel for the defendant, further referred me to s. 160 of the 1963 Act which provides that:-

15

an auditor holds office until the conclusion of the next Annual General Meeting following his appointment and;

16

a retiring auditor shall be re-appointed without any resolution being passed unless... he is not qualified for appointment; [emphasis added]

17

(f) Counsel for the defendant argued from this that the prosecution was misconceived, and that the appropriate prosecution for the Minister to take on the facts disclosed in the statements would have been against the company for failing to appoint an auditor as required by s. 160 of the Companies Act, 1963:

18

(g) He stated that no evidence had been presented by the prosecution of any act actually committed by any one of the defendants in relation to the company and he disputed that the offence referred to was in fact a strict liability offence and pointed out that it was indictable. No evidence had been adduced as to which, if any, of the defendants had...

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