Purcell v Central Bank of Ireland

• Jurisdiction: Ireland
• Judge: Mr. Justice Hedigan
• Judgment Date: 29 July 2016
• Neutral Citation: [2016] IEHC 514
• Court: High Court
• Docket Number: [2015 No. 510 J.R.]
• Date: 29 July 2016

[2016] IEHC 514

THE HIGH COURT

JUDICIAL REVIEW

Hedigan J.

[2015 No. 510 J.R.]

[2015 No. 5823 P.]

BETWEEN

JOHN STANLEY PURCELL

APPLICANT

AND

CENTRAL BANK OF IRELAND, IRELAND

AND

THE ATTORNEY GENERAL

RESPONDENTS

AND

JOHN STANLEY PURCELL

PLAINTIFF

AND

CENTRAL BANK OF IRELAND, THE ATTORNEY GENERAL OF IRELAND

AND

IRELAND

DEFENDANTS

Banking & Finance – Central Bank Act, 1942, as amended – Contravention of prescribed procedures – Inquiry – Judicial review – Bias, prejudice and delay – Fair hearing – Public interest.

Facts: The applicant sought reliefs by way of an application for judicial review and plenary action. The applicant challenged the jurisdiction of the first named respondent to hold an inquiry against the applicant as part of the first named respondent's Administrative Sanctions Procedures (ASP) in accordance with part IIIC of the Central Bank Act 1942, as amended. The applicant challenged the decision of the first named respondent to hold an inquiry against the applicant for the determination of the applicant's participation in the purported prescribed contraventions of Irish Nationwide Building Society (INBS) on grounds of delay in initiation of inquiry, bias, prejudgement and oppression. The first named respondent contended that the matters raised by the applicant in judicial review would be more properly the matters for the inquiry. The first named respondent rejected all the grounds of challenge of applicant against the decision of the first named respondent.

Mr. Justice Hedigan refused to grant the reliefs sought by the applicant. The Court found that under s. 33AO (2) of the 1942 Act as amended, the applicant would be lawfully subjected to the inquiry. The Court found that no rights of the applicant had been infringed by the settlement entered into by the respondent with INBS. The Court found that the procedures and guidelines drawn up by the Act ensured fair hearing to the applicant. The Court held that the applicant failed to establish bias and prejudice arising out of the culpable delay. The Court found that there had been no actionable oppression of the applicant in relation to the cost of the involvement in the inquiry. The Court further found that the burden on the applicant of pursuing the inquiry would not be disproportionate to the level of public interest in enquiring into the collapse of the INBS, which would be a national financial disaster.

JUDGMENT of Mr. Justice Hedigan delivered on the 29th day of July, 2016.

1 INTRODUCTION

1.1 The present proceedings involve both a judicial review and plenary action. In the judicial review, Mr. Purcell ('the applicant') challenges the jurisdiction of the Central Bank of Ireland to hold an inquiry in respect of him, as part of the Central Bank's administrative sanctions procedure ('the ASP'), pursuant to Part IIIC of the Central Bank Act 1942, as amended ('the Act of 1942'). The applicant has also raised a number of procedural challenges in respect of the Central Bank's decision to initiate the inquiry, including delay, bias, pre-judgment and oppression and equality before the law. By order of White J., dated 8th September, 2015, leave was granted to the applicant to seek the following reliefs:

'(i) An order of certiorari quashing the decision of the First Respondent to hold an Inquiry under part IIIC of the Central Bank Act 1942 (as amended) to determine whether the Applicant participated in the commission of purported prescribed contraventions of Irish Nationwide Building Society (INBS).

(ii) An order of prohibition preventing the respondent, its servants or agents from holding any proposed Inquiry in respect of the Applicant pursuant to part IIIC of the Central Bank 1942 as amended.

(iii) A declaration, by way of judicial review, that the decision of the First Respondent to hold an Inquiry pursuant to part IIIC of the 1942 Act is ultra vires, null and void and of no legal effect.

(iv) An order of certiorari quashing the decision of the First Respondent to issue a Notice of Inquiry under part IIIC of the Central Bank Act 1942 (as amended) to determine whether the Applicant participated in the commission of purported prescribed contraventions of INBS.

(v) A declaration, by way of judicial review, that the decision of the First Respondent to issue a Notice of Inquiry pursuant to part IIIC of the 1942 Act is ultra vires, null and void and of no legal effect.

(vi) A declaration, by way of judicial review, that in determining to issue a Notice of Inquiry in respect of the Applicant, the First Respondent acted in excess of the Central Bank Act 1942 as amended and without jurisdiction.

(vii) A declaration by way of Judicial Review that the decision of the First Named Respondent to initiate an Inquiry is null and void and of no effect by reason of the Respondent's failure to adhere to the principles of natural and constitutional justice enshrined in Bunreacht na hÉireann and the European Convention on Human Rights.

(viii) A declaration by way of Judicial Review that the decision of the First Named Respondent to initiate an Inquiry was made in breach of fair procedures and natural justice.

(ix) An order of certiorari quashing the decision of the First Respondent to enter into a settlement with INBS dated 15th July 2015.

(x) A declaration, by way of judicial review, that the "settlement" entered into between the first Respondent and INBS dated 15th July 2015 is ultra vires, null and void and of no legal effect.'

1.2 In the plenary proceedings, the applicant challenges the constitutionality of Part IIIC of the Act of 1942 and seeks, inter alia, the following reliefs in respect of the notice of inquiry issued to him by the Central Bank:

(i) A declaration that Part IIIC of the 1942 Act is invalid by virtue of Article 15.4 of Bunreacht na hÉireann being repugnant to Article 34 and Article 38 thereof;

(ii) A declaration that the first defendant, in adopting the procedures purportedly enacted by the third defendant in Part IIIC of the 1942 Act has acted to the detriment of the plaintiff and in breach of his personal right to his good name and to earn a livelihood under Article 40.3.2 of Bunreacht na hÉireann;

(iii) A declaration that the first defendant was acting ultra vires in entering into a settlement pursuant to Part IIIC of the 1942 Act with INBS;

(iv) Damages.

The declaratory relief sought in respect of incompatibility with Article 6 and the provisions of the first part of the first schedule of the European Convention on Human Rights is no longer being pursued.

2 THE PARTIES

2.1 The applicant is a former executive director and secretary of Irish Nationwide Building Society ('the INBS'), having retired on 31st March, 2010.

2.2 The Central Bank of Ireland is a statutory body responsible for regulating and supervising the conduct of financial institutions in Ireland having offices at Dame Street, Dublin 2. The powers of the Central Bank derive from the Act of 1942.

2.3 The Attorney General is the chief law officer of the State designated by the Constitution.

2.4 The second and third defendants are joined to these proceedings as the appropriate defendants where a constitutional claim is made against the State.

3 FACTUAL BACKGROUND

3.1 The applicant is a former executive director and secretary of INBS. INBS was a building society regulated by the Central Bank of Ireland/Irish Financial Services Regulatory Authority ('IFSRA').

3.2 The applicant joined INBS in 1986 and he remained there until he resigned from his position on 31st March, 2010. He joined INBS as its financial controller and remained in that position until April 2003 when he became secretary. He was also appointed as an executive director in December 1994. In his capacity as secretary, the applicant attended Audit Committee meetings between 2003 and 2010 and was a member of the senior management of INBS throughout the period 2004–2008. The applicant tendered his resignation from INBS in circumstances where the Minister for Finance declared that 'legacy directors' (he was one) were not to remain in institutions covered by the State guarantee. He states that since then, he has not been in a position to obtain employment. At the end of 2011, together with a business partner, he formed a limited company, Private Financial Management Limited ('PFML'). He further states that a small amount of work was brought in by the company in 2012 and in early 2013 work was obtained from an entity which helped people with loan arrears. He also did some limited part-time sub contract work for a firm of accountants. However, the applicant states that both work arrangements ceased after it became clear that the clients did not want the applicant involved given the ASP and civil action against him. PFML ceased trading in 2013.

3.3 INBS was a building society regulated by the Central Bank throughout the period the subject matter of the notice of inquiry. INBS increased dramatically in size from 1986–2007. In 2008, INBS began to sustain severe losses and on 30th September, 2008, INBS was one of six Irish institutions whose debts were covered by the State guarantee. The assets and liabilities of INBS were transferred to Irish Bank Resolution Corporation ('the IBRC') on 1st July, 2011, pursuant to an order of the High Court. On the 28th July, 2011, INBS"s authorisation to raise funds under the terms of s. 17 of the Building Societies Act 1989 ('the Act of 1989') was revoked in accordance with s. 40 of the Act of 1989. This revocation, however, did not affect its status as a registered building society and INBS continues to be subject to the obligations imposed by the Act of 1989.

3.4 The collapse of INBS resulted in a cost to the Irish taxpayer in excess of €5 billion. The Central Bank determined that it was necessary to investigate whether it was appropriate to conduct an inquiry into...