The Director of Corporate Enforcement v Independent News and Media Plc

• Jurisdiction: Ireland
• Judge: Mr. Justice Kelly
• Judgment Date: 30 July 2019
• Neutral Citation: [2019] IEHC 589
• Court: High Court
• Docket Number: [2018 No. 124 COS]
• Date: 30 July 2019

IN THE MATTER OF INDEPENDENT NEWS AND MEDIA PLC AND IN THE MATTER OF THE COMPANIES ACT 2014

BETWEEN

THE DIRECTOR OF CORPORATE ENFORCEMENT

APPLICANT

AND

INDEPENDENT NEWS AND MEDIA PLC

RESPONDENT

[2019] IEHC 589

Kelly P.

[2018 No. 124 COS]

THE HIGH COURT

Interim report – Statutory entitlement – Discretion – Applicants seeking to be provided with copies of an interim report presented to the High Court by inspectors appointed over the respondent – Whether it would be an appropriate exercise of the court’s discretion to direct the furnishing of the report to all of the applicants

Facts: Numerous persons and entities (the applicants) applied to the High Court to be provided with copies of an interim report presented to the court by inspectors appointed over the respondent, Independent News and Media plc. All of the applicants agreed that they had no absolute entitlement to a copy of the inspectors’ report; they had a statutory entitlement to apply to the court and thereafter it was a matter of the court’s discretion as to whether they should be furnished with a copy of the report.

Held by Kelly P that all of the applicants were conferred with the statutory right to apply for a copy of the report. Kelly P held that the respondent clearly had an interest in how the work of the inspectors was progressing and the estimate of how much longer the inspection was likely to take. Likewise, persons whose conduct was referred to in the report as well as those whose financial interests may be affected by matters dealt with in it had, in Kelly P’s view, a prima facie entitlement to be informed of progress to date and what lies ahead. Kelly P readily accepted that it was only the court and, to a very limited extent, the Director of Corporate Enforcement, who had a legitimate interest in having oversight of the work carried out by the inspectors, but he did not believe that the furnishing of a copy of the report to the applicants would in any way interfere with that oversight. The principal matter of concern to Kelly P in the exercise of his discretion was the opposition registered by the inspectors; whilst they were opposed to the provision of the report in its totality, in reality it was to those parts of the report which dealt with evidential material that they directed their opposition. Kelly P fully appreciated that they gave a commitment of confidentiality to all of the parties with whom they spoke. The inspectors informed Kelly P that it had been particularly productive in assisting in their work; they had been able to obtain the cooperation of individuals without the fear of material leaking into the public domain. Kelly P held that it would be quite inappropriate for the court to take any step which might cut across that commitment given by the inspectors and thus result in them being hindered in their important task. Kelly P held that the court should not take any step which might impede the progress of the inspection or jeopardise in any way the integrity and progress of the inspection. That said, however, Kelly P did not see any objection to those parts of the report which did not deal with evidential matters being disclosed.

Kelly P held that it would be an appropriate exercise of the court’s discretion to direct the furnishing of the report to all of the applicants given their respective interests but with appropriate redactions so as to fully take account of the inspectors’ concerns.

Application granted.

JUDGMENT of Mr. Justice Kelly , President of the High Court delivered on the 30th day of July, 2019

Introduction

1 This is my judgment on the application of numerous persons and entities (‘the Applicants’) to be provided with copies of an interim report presented to the court by Inspectors appointed over the Respondent.

The Inspectors

2 On 4th September, 2018 I appointed Sean Gillane S.C. and Richard Fleck CBE as Inspectors (‘the Inspectors’) over the Respondent pursuant to the provisions of s.748 of the Companies Act 2014 (‘the Act’). They were appointed to investigate and report on the affairs of the Respondent in accordance with terms of reference which were set out in the court order.

3 The Inspectors were directed to deliver an interim report to the court not later than 12th April, 2019. They delivered that report on the preceding day.

The terms of reference

4 The Inspectors were appointed to examine a number of different issues which are identified in some detail in my judgment of 4th September, 2018 [2018] IEHC 488. Four particular areas for investigation were identified. They were called:-

1. The Data Interrogation Issue

2. The Newstalk Acquisition/APN Transaction

3. The Independent Review Process

4. Alleged market abuse.

The majority of the parties seeking to be provided with a copy of the Inspectors” interim report are concerned with just one of those four issues namely the data interrogation question.

The Data Interrogation issue

5 This issue is described in my judgment of 4th September, 2018 so only a short summary of it is required for the purposes of this ruling.

6 In 2014 back-up tapes of computer data were removed from the Respondent's premises. They were taken out of the jurisdiction and that data was interrogated over a period of months. This operation was allegedly directed by Mr. Leslie Buckley the then chairman of the board of the Respondent. It was alleged that this exercise was carried out as part of a cost cutting measure in respect of legal fees payable to a firm of solicitors. Other members of the board of the Respondent were apparently not aware of the operation at that time. During the course of the interrogation, the data was accessible to and accessed by a range of individuals who are external to the company. They have business links with Mr. Buckley and with each other. They also appear to have links with Mr. Denis O'Brien the then largest shareholder in the company.

7 During the course of that interrogation, data appears to have been searched against the names of 19 individuals. They included Messrs. Vincent Crowley, Rory Godson and Maeve Sheehan. Grave concerns have been expressed about the lawfulness of this activity. That is particularly so in the case of journalists who believe their personal data and material which was accessed may well have contained information covered by journalistic privilege. Two of the persons against whom data was searched are members of the Inner Bar who acted for several years as counsel to The Inquiry into Payments to Politicians and Related Matters presided over by Mr. Justice Moriarty. That tribunal was involved in investigations into allegations related to the awarding of the second GSM licence to ESAT which is an entity controlled by Mr. Denis O'Brien. In a letter of 30th April, 2018 the Respondent's solicitors described the names of those searched against as persons who may be regarded as having acted adversely to Mr. O'Brien.

8 It is difficult to see what the interrogation of information concerning at least some of the 19 persons had to do with the cost reduction exercise that was allegedly being carried out. The lawfulness of this whole operation is very questionable.

The statutory provisions

9 Section 759 of the Act deals with the distribution of an Inspector's report. Subsection 1 is framed in mandatory terms and requires the court to provide a copy of every such report to the Director of Corporate Enforcement (‘the Director’). Subsection 2 reads as follows:-

‘The court may: –

(a) forward a copy of an inspectors' report to the registered office of the company that is the subject of the report;

(b) provide a copy of an inspectors' report on request to any of the following:

(i) a member of the company or other body corporate that is the subject of the report;

(ii) a person whose conduct is referred to in the report;

(iii) the statutory auditors of the company or other body corporate;

(iv) if other than the Director, the person or persons who applied for the appointment of the inspectors;

(v) any other person (including an employee or creditor of the company or other body corporate) whose financial interests appear to the court to be affected by the matters dealt with in the report;

(vi) the Central Bank, if the report relates, wholly or partly, to the affairs of a credit institution.’

10 Subsection 3 entitles the court to provide a copy of an inspectors” report to certain appropriate authorities. Subsection 4 provides that the court may cause an inspectors” report to be published in such form and manner as it thinks fit. Subsection 5 reads as follows:-

‘The court may direct that a particular part of an inspectors' report be omitted from a copy that is forwarded or provided under subsection ( 2) or (3) or a report that is printed and published under subsection (4).’

11 In accordance with s. 759(1) of the Act I provided a copy of the Inspectors” interim report to the Director. He is the only person entitled as...