Minister for Industry and Commerce v Siúcre Éireann

• Jurisdiction: Ireland
• Judge: Mr. Justice Lynch
• Judgment Date: 01 May 1992
• Neutral Citation: 1992 WJSC-HC 2524
• Court: High Court
• Docket Number: No. 738 Sp. Ct.6/1991,[1991 No. 738 Sp. Ct. 6]
• Date: 01 May 1992

MIN INDUSTRY & COMMERCE v. SIUCRE EIREANN CPT

IN THE MATTER OF SECTION 8 OF THE COMPANIES ACT 1990

IN THE MATTER OF THE MINISTER FOR INDUSTRY AND COMMERCE

v.

SIUCRE EIREANN C.P.T.

AND IN THE MATTER OF SECTION 13 (1)(a) OF THE COMPANIES ACT

1990

AND IN THE MATTER OF ORDER 75 (b), 3 (d) OF THE RULES OF THE

SUPERIOR COURTS

BETWEEN

THE MINISTER FOR JUSTICE

APPLICANT

AND

SIUCRE EIREANN C.P.T., GREENCORE PLC, SUGAR DISTRIBUTORS(HOLDINGS) LIMITED, GLADEBROOK COMPANY LIMITED, SUGAR DISTRIBUTORSLIMITED, SUGAR DISTRIBUTORS (EXPORTS) LIMITED, I.S.M. INVESTMENTSLIMITED, TRILBY COMMODITY TRADING LIMITED, TRILBY TRADING LIMITED,TALMINO LIMITED (UNDER INVESTIGATION)

RESPONDENTS

1992 WJSC-HC 2524

No. 738 Sp. Ct.6/1991

THE HIGH COURT

Synopsis:

COMPANY

Affairs

Investigation - Minister - Expenses - Repayment - Equity - State company - Privatisation - Irregularities when company controlled by State - Injustice to current shareholders - Whether foreign company carried on business in the State - Companies Act, 1990, ss. 8, 9, 13, 17 - (1991/738 Sp - Lynch J. - 1/5/92) 1992 2 I.R. 215

|Minister for Justice v. Siucre Eireann Cpt.|

WORDS AND PHRASES

"Dealt with in the report"

Company - Affairs - Investigation - Inspector - Report - Reference to foreign company not the subject of investigation - Whether foreign company dealt with - (1991/738 Sp - Lynch J. - 1/5/92)

|Minister for Justice v. Siucre Eireann Cpt.|

WORDS AND PHRASES

"Carrying on business"

Company - Transactions - Continuity - Absence - Shares - Purchase and sale of single holding - Whether business carried on in the State - (1991/738 Sp - Lynch J. - 1/5/92) - [1992] 2 I.R. 215

|Minister for Justice v. Siucre Eireann Cpt.|

Citations:

COMPANIES ACT 1990 S13(1)(a)

COMPANIES ACT 1990 S8

COMPANIES ACT 1990 S9

COMPANIES ACT 1990 S11

COMPANIES ACT 1990 S11(3)

COMPANIES ACT 1990 S11(3)(c)

SUGAR MANUFACTURE ACT 1933

SUGAR MANUFACTURE (AMDT) ACT 1962

SUGAR MANUFACTURE (AMDT) ACT 1973 S4

COMPANIES ACT 1990 PART II

COMPANIES ACT 1990 S1(3)

COMPANIES ACTS 1963 – 1990

COMPANIES ACT 1963 S2(1)

COMPANIES ACT 1963 S2(3)

COMPANIES ACT 1990 S141

COMPANIES ACT 1990 S17

COMPANIES ACT 1990 S7

COMPANIES ACT 1990 S13(1)

COMPANIES ACT 1990 S13(2)

FOSS V HARBOTTLE 1843 2 HARE 461

MONEYLENDERS ACT 1900 S6

CRIPPS WARBURG LTD V COLOGNE INVESTMENT CO LTD & ORS 1980 IR 321

HALSBURY'S LAWS 4ED V7(1) PARA 22, V10 PARA 108, V37 PARA 14

COMPANIES ACT 1990 S3(1)

COMPANIES ACT 1990 S10

COMPANIES ACT 1990 S13

COMPANIES ACT 1990 S18

COMPANIES ACT 1990 S22

COMPANIES ACT 1990 S13(3)

COMPANIES ACT 1963 S140

GIBSON'S SETTLEMENT, IN RE 1981 1 AER 233

BENNION INTERPRETATION OF STATUTES 1984 302

1 Judgment of Mr. Justice Lynchdelivered the 1st day of May 1992.

2 This is an application brought by the Minister for Justice pursuant to Section 13 (1)(a) of the Companies Act 1990for the reimbursement to him of expenses incurred by him of and incidental to an investigation of (inter alia) the Respondent Companies but not including the last named Respondent (Talmino) which is a foreign Company registered in Jersey in March 1989 and insofar as the title to the proceedings as brought by the Minister for Justice suggests that that Company was under investigation the title is erroneous.

3 The investigation was ordered by the High Court on the 16th of September 1991 on the application for the Minister for Industry and Commerce under Section 8 of the 1990 Act for the appointment of two Inspectors to investigate the affairs of the first named Respondent (Siucre Eireann). On the 18th of September 1991 on the application of the Inspectors an Order was made pursuant to Section 9 of the 1990 Act authorizing the Inspectors to investigate (inter alia) the other Respondents being Companies related to Siucre Eireann but not including Talmino.

4 The investigation carried out by the Inspectors was a very thorough and detailed investigation and to quote from the written submissions of the Applicant the Minister for Justice filed in Court in advance of the application "their findings, and indeed the attention to detail in the report, fully justifies the amount of time and effort expended by the Inspectors".

5 Pursuant to Section 11 of the 1990 Act the Inspectors issued two interim reports on the 7th of October and 11th of November 1991 respectively a copy of the first of which wastransmitted to the Minister for Industry and Commerce only and a copy of the second to that Minister and to the second Respondent (Greencore) pursuant to Section 11 (3) of the 1990 Act. The Inspectors" final report was presented to the High Court on the 25th of February 1992 and it together with the two interim reports were pursuant to Section 11 (3)(c) ordered to be printed and published by Order of the High Court made the 3rd of March 1992.

6 The Affidavit of Mr. Crowley of the Department of Justice sworn the 27th of February 1992 grounding this application by the Minister for Justice for reimbursement proves that the expenses of and incidental to the investigation amount to approximately £1,150,000 inclusive of V.A.T. and exclusive of V.A.T. (which goes back to the State any how) to approximately £960,000.

THE FACTS

7 The Inspectors" final report sets out in detail the matters investigated and the facts found and opinions formed by the Inspectors. It is sufficient for me to state in this Judgment just a few facts which seem to me to be particularly relevant to the issues to be decided by me on this application by the Minister for Justice.

8 Siucre Eireann was established in 1933 pursuant to the Sugar Manufacture Act 1933.Thereafter the Minister for Finance on behalf of the State held all the share capital of Siucre Eireann and exercised a dominant position in relation to the Board of Directors of Siucre Eireann. The powers of the Minister for Finance were extended to subsidiary Companies by the Sugar Manufacture (Amendment) Act 1962butnot otherwise materially altered. The Minister for Finance's powers were again extended by the Sugar Manufacture (Amendment) Act 1973and Section 4 of that Act provided as follows:-

"4. The Schedule to the Principal Act is hereby amended by the substitution of the following for paragraph 3:"

9 3. The Articles of Association of the Company shall provide -

10 (a) that the directors of the Company shall be of such number not exceeding ten as the Minister may from time to time determine;

11 (b) that a majority of the directors (being the smallest majority in any particular case) shall be nominated by the Minister;

12 (d) that a person shall not be capable of being appointed auditor of the Company unless the approval of the Minister to the nomination of that person to the office of auditor of the Company has beengiven."

13 The Minister for Finance on behalf of the State continued to own the entire share capital of Siucre Eireann until 1991. In or about June 1990 it was decided that the Minister for Finance should dispose of approximately 55% of the State's holding in Siucre Eireann by means ofprivatisation. Towards this end a holding Company Greencore was formed under the Companies Acts 1963to 1990on the 14th of February 1991. Under powers accorded to him under the Sugar Act 1991the Minister exchanged the ordinary shares owned by him in Siucre Eireann for shares in Greencore amounting at that time to 100% of the equity of Greencore. This exchange took place on the 20th of March1991.

14 On the 18th of April 1991 the Minister for Finance sold 27,400,000 of his shares in Greencore and Greencore issued 12,056,544 new shares to members of the public all at the price of 230p per share except for 6,500,426 shares which were offered for sale at 184p each to certain employees and beet growers. The Minister for Finance thus reduced the State's holding in what I will call the enterprise (meaning thereby Greencore and all its various subsidiary Companies) from 100% to 45%. The said Minister in or about February 1992 disposed of a further 15% of his shareholding so that the State's interest in the enterprise is now only 30% and the 70% balance is owned by approximately 8,800 private shareholders and by several different institutions including I infer pension funds in which ordinary working men and women who never owned a company share in their own right in their lives would have an interest as the source and guarantee of their pensions.

15 The Order of the High Court of the 16th of September 1991 was made on foot of an Affidavit by Mr. Sean Dorgan Secretary of the Department of Industry and Commerce and an Affidavit of Mr. Denis G. Hickey of the Department of Finance both sworn on the 16th of September 1991. Those Affidavits proved the possibility of serious irregularities in Siucre Eireann between 1988 and its privatisation in 1991 such as tojustify an investigation pursuant to Section 8 of the 1990 Act and the Order of the High Court of the 16th of September 1991 was accordinglymade.

16 The Inspectors" final report finds various irregularities and possible and probable irregularities in the conduct of the enterprise. These irregularities all occurred between 1988 and the privatisation of the enterprise in 1991. The only criticism in the report of the Board of Directors of Greencore since privatisation is that they ought to have dismissed Mr. Comerford forthwith on the 3rd of September 1991 instead of agreeing to his resignation on terms. That is not a matter that gave rise to the investigation of the enterprise.

THE LAW

17 The Applicant's claim for reimbursement of the expenses of and incidental to the investigation must be considered separately as against the first nine Respondents being part of the enterprise on the one hand and as against Talmino which is not part of the enterprise on the other hand. It is desirable to summarize in part and to quote in full where necessary the relevant provisions of the Companies Act 1990especially as this is the first time that...