Re National Irish Bank Ltd (No. 3)

• Jurisdiction: Ireland
• Judgment Date: 23 July 2004
• Date: 23 July 2004
• Docket Number: [1998 No. 89 COS
• Court: High Court

Re National Irish Bank Ltd. (No. 3)

In the matter of National Irish Bank Limited (under investigation) and in the matter of National Irish Bank Financial Services Limited (under investigation) and in the matter of the Companies Act 1990 (No. 3)

[2004] IEHC 287,

[1998 No. 89 COS and 1998 No. 132 COS]

High Court

Company - Investigation - Inspectors - Final report - Whether parties affected entitled to be furnished with final report - Whether entitlement to be furnished with report in advance of publication - Winding up of body corporate on court's own motion - Whether in public interest that companies be wound up - Admissibility of report in civil proceedings - Retention and destruction of inspectors' documents - Companies Act 1990 (No. 33), ss. 7(4), 11(3), 11(4) and 12.

Evidence - Admissibility - Inspectors' report - Company investigation - Civil proceedings - Whether inspectors' report admissible in subsequent civil proceedings - Companies Act 1990 (No. 33), s. 22.

In 1998 the High Court appointed inspectors, pursuant to s. 8(1) of the Companies Act 1990, to investigate the affairs of a bank and a company. On completion of the inspector's final report a hearing took place in order that directions and orders might be made as envisaged by ss. 11, 12 and 13 of the Companies Act 1990. The issues to be addressed included who should be furnished with the final report, whether it should be printed and published and the jurisdiction of the court to wind up the company. Advance notice was advertised in the public press and those interested in appearing were advised to give notice to the solicitors for the inspectors. In total nine parties appeared.

Held by the High Court (Kelly J.), in determining the issues, 1, that the powers invested in the court by s. 11(3) and (4) of the Act of 1990, concerning the publication and the furnishing of the report, were discretionary.

2. That those parties materially affected by the report should be furnished with it upon request.

3. That the Central Bank and the Irish Financial Services Regulatory Authority be furnished with the report forthwith, in view of their regulatory function and lack of knowledge of the contents of the report in draft or final form. They would need it to assess its regulatory implications.

4. That, where the bank, company and inspectors favoured publication in full, the matters the inspectors were asked to inquire into were very serious particularly in the context of the conduct of a banking business. As a consequence the outcome of the inquiry was of importance to the bank, its staff, customers and shareholders as well as the regulatory authorities and the general public who were entitled to know the outcome of an investigation into the banking structure of the State. Therefore the report should be published in full. If prosecutions ensued directions from a trial judge would be sufficient to negate any possible prejudice caused by the publication of the report.

5. That the decision whether or not to make a winding up order under s. 12(1)(a) of the Act of 1990 was one exclusively for the court and the only basis upon which the court should of its own motion make an order for the winding up of a body corporate was in circumstances where it was satisfied that the public interest required it.

Re Walter L. Jacob & Co. Ltd. [1989] B.C.L.C. 345 considered.

6. That it would not be in the public interest to wind up the bank, notwithstanding the findings of widespread improper practices of the utmost gravity, where the bank had committed itself to addressing the issues not merely by word but also by deed and any winding up would adversely affect the measures taken to address the issues. A winding up would have consequences for the bank's customers and the banking system and having due regard to the view of the inspectors and the Director of Corporate Enforcement, it was not in the public interest.

7. That it would not be appropriate to make an order under s. 12(1)(b) of the Act of 1990 for the purpose of remedying any disability suffered due to the conduct of the bank or the company, where the bank had attempted to put in place structures aimed at remedying any loss and a person who was wronged was not deprived of access to the courts in order to seek a remedy.

8. That the inspectors' report was admissible in any civil proceedings as evidence of both the facts set out therein and of the opinion of the inspector in relation to any matter contained in the report.

9. That, where the bank expressed the view that the taxpayer should not be liable for the inspectors' costs, the bank should discharge the inspectors' actual cost of the investigation and legal costs on a solicitor and own client basis.

Cases mentioned in this report:-

Re Walter L. Jacob & Co. Ltd. [1989] B.C.L.C. 345.

Motion for directions

The facts and the relevant statutory provisions have been summarised in the headnote and are more fully set out in the judgment of Kelly J., infra.

By motion dated the 14th July, 2004, the inspectors, having delivered their final report, sought the directions of the High Court on a number of matters.

The first issue was who should be furnished with a copy of the inspectors' report and whether the report should be printed and published by the Director of Corporate Enforcement. Secondly, the court then had to consider whether, of its own motion, an order should be made for the winding up of the companies. Thirdly, the inspectors sought an order directing the bank to pay the expenses of and incidental to the investigation to such an extent as the court sought fit. Finally, the inspectors sought directions as to the retention and storage of documents relating to the investigation.

The motion was heard by the High Court (Kelly J.) on the 21st July, 2004.

Cur. adv. vult.

Kelly J. 23rd July, 2004

Introduction

1 In 1998, the Honourable Mr. Justice John Blayney and Mr. Tom Grace were appointed by this court, pursuant to s. 8(1) of the Companies Act 1990, as inspectors to investigate the affairs of National Irish Bank (the bank) and National Irish Bank Financial Services Ltd. (the company). During the last six years those inspectors have conducted an investigation into the affairs of the bank and the company as directed by the court orders appointing them.

2 On the 12th July, 2004, their final report, dated the 9th July, 2004, was delivered to me in open court. On that occasion I made an order in accordance with the provisions of s. 11(3) of the Companies Act 1990 (as amended by the Company Law Enforcement Act 2001), that a copy of the report be furnished to the Director of Corporate Enforcement (the Director). The report was given to an officer of the Director upon an undertaking being given that no disclosure or publication of its contents would be made pending further order of the court.

3 On the same day, I made an order that a hearing should take place on Wednesday, the 21st July, 2004, with a view to the court giving directions and making orders as envisaged under ss. 11, 12 and 13 of the Companies Act 1990. Advance notice of that hearing was advertised in the public press and any party with an interest in participating was advised to give notice in writing of their intention to do so to the solicitors for the inspectors.

The hearing

4 Nine parties gave notice of intention to appear and did in fact appear. They were as follows:-

• 1. the bank;

• 2. the company;

• 3. the Irish Financial Services Regulatory Authority;

• 4. the Office of the Director of Corporate Enforcement;

• 5. the Revenue Commissioners;

• 6. Ms. Beverley Flynn;

• 7. Mr. Barry Seymour;

• 8. Mr. Patrick Byrne;

• 9. Mr. Pat O'Donovan;

Messrs. Flynn, Seymour and Byrne appeared as parties who apprehended that the inspectors may have made adverse findings concerning them. Mr. O'Donovan appeared as a creditor of the bank.

5 Aword of explanation is called for in the case of Ms. Flynn and Messrs. Seymour and Byrne. They were aware of the fact that adverse findings might be contained in the inspectors' final report as a result of the court approved procedures followed by the inspectors. Under those procedures, the inspectors were obliged to furnish a draft of any adverse finding to any person affected by them. An opportunity was then given to such a person to be heard by the...