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England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Times Newspapers Ltd v McNamara  EWHC B12 (Ch) (13 August 2013)
Cite as:  EWHC B12 (Ch),  BPIR 1092
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IN THE MATTER OF MICHAEL BERNARD McNAMARA
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
No 7 The Rolls Buildings, Fetter Lane
London, EC4A 1NL
B e f o r e :
| TIMES NEWSPAPERS LIMITED
|- and -
|MICHAEL BERNARD McNAMARA
The Respondent did not appear and was not represented
Hearing date: 18 July 2013
Crown Copyright ©
Mr Registrar Baister:
The petition and the application
"5. The Sunday Times (Ireland) has a history of reporting on matters of great national and international concern and of quality, investigative journalism on matters of significant public interest. In particular, the Sunday Times (Ireland) has avidly reported upon the financial crisis in Ireland and the impact of Irish businessmen relocating to this jurisdiction in order to avail [themselves] of the more lenient bankruptcy regime (referred to as "bankruptcy tourism").
6. Mr McNamara is very well known in Ireland (and in the United Kingdom) from his role as a property developer and hotelier. Mr McNamara was one of the leading property developers in Ireland before the property bust. He was involved in some of the most expensive and controversial land deals done in Ireland during the boom. When the crash occurred his loans of some €1.5 billion were taken over by the National Asset Management Agency (NAMA), the "bad bank" set up by the Irish government. Mr McNamara was reported to have been paid up to €300,000 by NAMA while managing his affairs with NAMA. He declared bankruptcy in England shortly before NAMA sought to have a multi-million euro judgment registered against him in the Irish High Court. Mr McNamara was a former Fianna Fail politician and stood for the election to the Dail, the Irish parliament, in 1981. Fianna Fail was the party in power from 1997 to 2011 in Ireland. Mr McNamara's companies were know for their close support of Fianna Fail and for winning many lucrative public contracts. When NAMA was first established many saw it as a "bailout for the developers" by Fianna Fail.
7. Mr McNamara and his companies amassed debts o[f] €1.5 billion largely with banks that now have been bailed out by the Irish or British taxpayers. Despite his bankruptcy it has been reported that Mr McNamara continues to work in property development and continues to live in relative luxury. I understand as part of his bankruptcy application Mr McNamara would have had to declare what security banks or other creditors had over his assets. There is a strong public interest in discovering what security, if any, the banks took from Mr McNamara before issuing massive loans that had the property prices in Ireland in the last decade before the property bubble burst. There is also a public interest in discovering what, if any, steps NAMA took to prevent Mr McNamara from dissipating his many assets before he declared bankruptcy. Also, although McNamara has been able to wipe away over €1.5 billion of debt in Ireland it is not clear on what basis he has established his Centre of Main Interest (COMI) is in England and not Ireland where he has [been] known to be based. It is in the public interest for it to be revealed how Mr McNamara has established his COMI as England when it appears not even NAMA his biggest creditor was aware of this as it pursued him through the Irish courts.
8. I identified grounds of strong public interest supporting the application for access to the court documents identified above in section (b) of the application notice, namely the process (on a case by case basis) by which bankruptcy petitioners from the Irish republic, notably those involved in property development, are able to be declared bankrupt in England and Wales, and thereby select a preferred forum for their bankruptcy (the process of being discharged from bankruptcy may take up to twelve years in Ireland compared to one in England). Secondly I identify that the Respondent owes substantial sums to Irish banks which have been bailed out by Irish taxpayers, the state and European bailout funds.
9. I understand, that in particular, property developers, of whom Mr McNamara was one, borrowed heavily from Irish banks to fund their activities in the last decade. (One of Mr McNamara's biggest creditors was Anglo Irish Bank, which has now been taken over by the Irish state at a cost of over €31 billion.) Through bailout agreements with the EU and other states, such as the UK, Ireland has been saddled with substantial debts of around €180 billion, money which has been spent, in large part, recapitalising Irish banks which had lent on property development. I understand that by submitting their affairs to the courts in England and Wales to declare bankruptcy here, wealthy developers who owed €2 billion to Irish banks or the state have submitted to the jurisdiction of the Court in England and Wales as part of a wave of "bankruptcy tourism". This has led, I gather, to discussions of the urgent reform of the bankruptcy system in Ireland as well as European harmonisation of personal insolvency rules. Accordingly, the English courts have discretion over substantial assets which may be owed to Irish banks.
11. A third element of public interest exists. It is in the public interest that the amounts owed by the Respondent to each bank and the security those banks have on the loans should be publicly disclosed. Frequently during the boom years loans were given out based on insufficient security such as personal guarantees or property assets with over-inflated values – sometimes the same property was used as security for several loans. Through my [sic] investigations I hope to establish whether the banks gave these multi-million euro loans out without sufficient security. There is a public interest in exposing the mechanics of the rampant speculation which took place.
13 The applicant, through Mr Tighe's journalism, has [been] reporting seriously on the issue of bankruptcy tourism for three years. A small, non-exhaustive selection of other UK newspaper cuttings exhibited to this statement (exhibit BM1) demonstrate that the matter is, and remains, one of public interest in UK and Ireland.
15. The applicant does not seek to publish any sort of "celebrity" story and is sensitive to any legally recognised privacy interest Mr McNamara or his close family members could have in information on the file, such as his address or name of the school his children (if any) attend, which would not be used. Such matters are against the law and the Press Complaints Commission Code of Conduct, abided by by the applicant. Any article may be published by the applicant's Irish or UK titles, as editorial interests dictate."
The law and the submissions
"(1) The court must open and maintain a file in any case where documents are filed with it under the Act or the Rules.
(2) Any documents which are filed with the court under the Act or the Rules must be placed on the file opened in accordance with paragraph (1).
(3) The following persons may inspect or obtain from the court a copy of, or a copy of any document or documents contained in, the file opened in accordance with paragraph (1)—
(a) the office-holder in the proceedings;
(b) the Secretary of State; and
(c) any person who is a creditor of the company to which, or the individual to whom, the proceedings relate if that person provides the court with a statement in writing by confirming that that person is a creditor.
(4) The same right to inspect or obtain a copy of, or a copy of any document or documents contained in, the file opened in accordance with paragraph (1) is exercisable—
(a) in proceedings under Parts 1 to 7 of the Act, by—
(i) an officer or former officer of the company to which the proceedings relate; or
(ii) a member of the company or a contributory in its winding up;
(b) in proceedings with respect to a voluntary arrangement under Part 8 of the Act, by the debtor;
(c) in bankruptcy proceedings, by—
(i) the bankrupt;
(ii) any person against whom a bankruptcy petition has been presented;
(iii) any person who has, in accordance with Chapter 1 of Part 6, been served with a statutory demand;
(d) in proceedings relating to a debt relief order, by the debtor.
(5) The right to inspect or obtain a copy of, or a copy of any document or documents contained in, the file opened in accordance with paragraph (1) may be exercised on that person's behalf by a person authorised to do so by that person.
(6) Any person who is not otherwise entitled to inspect or obtain a copy of, or a copy of any document or documents contained in, the file opened in accordance with paragraph (1) may do so if that person has the permission of the court.
(7) The court may direct that the file, a document (or part of it) or a copy of a document (or part of it) must not be made available under paragraph (3), (4) or (5) without the permission of the court.
(8) An application for a direction under paragraph (7) may be made by—
(a) the official receiver;
(b) the officer-holder in the proceedings; or
(c) any person appearing to the court to have an interest.
(9) Where any person wishes to exercise the right to inspect the file under paragraph (3), (4), (5) or (6), that person—
(a) if the permission of the court is required, must file with the court an application notice in accordance with these Rules; or
(b) if the permission of the court is not required, may inspect the file at any reasonable time.
(10) Where any person wishes to exercise the right to obtain a copy of a document under paragraph (3), (4), (5) or (6), that person must pay any prescribed fee and—
(a) if the permission of the court is required, file with the court an application notice in accordance with these Rules; or
(b) if the permission of the court is not required, file with the court a written request for the document.
(11) An application for—
(a) permission to inspect the file or obtain a copy of a document under paragraph (6); or
(b) a direction under paragraph (7),
may be made without notice to any other party, but the court may direct that notice must be given to any person who would be affected by its decision.
Rule 7.31A came into force alongside other amendments effected by the Insolvency (Amendment) Rules 2010 and introduced a new regime governing access to the court file in bankruptcy proceedings, replacing rules 7.26-7.31 (and, incidentally, abolishing the important distinction between the court record and the court file). It brings the procedure governing access to court documents in insolvency proceedings in line with that governed by the CPR.
"In accord with the usual practice in the Queen's Bench Division, interlocutory directions for the conduct of this litigation have been made in chambers. The defendants rely on this fact in support of the orders which have been made restricting communications between legal advisers and the media. Section 67 of the Supreme Court Act 1981 recognises the practice of the court of dealing with matters in chambers as opposed to in open court. As to s 67, the defendants rely upon The Supreme Court Practice 1997 vol 2, Pt 17, para 5276:
'The expression "in Chambers" used in this section in contrast to "in Court" means in private, secret, secluded behind closed doors, in proceedings at which only the parties and their advisers are entitled to be present and from which the public and the press are excluded unless invited to be present with the consent of the parties and the Court.'
This paragraph is attributed to the editorship of Sir Jack I H Jacob QC and therefore justifies great respect. However, in our judgment the paragraph does not by the use of the word 'secret' accurately reflect the significance of a hearing being in chambers rather than in open court. The present position is more accurately reflected in the judgment of Jacob J given on 21 November 1997 in Forbes v Smith  1 All ER at 974, when he said:
'A chambers hearing is in private, in the sense that members of the public are not given admission as of right to the courtroom. Courts sit in chambers or in open court generally merely as a matter of administrative convenience. For example, in the Chancery Division the normal practice for urgent interlocutory cases is for the matters to be heard in open court, the application being made by way of motion. Corresponding applications in the Queen's Bench Division are normally made in chambers. There is no logic or reason as to why exactly the same sort of case in one Division should be in open court and, in another Division, in chambers.'
The views there expressed by Jacob J can be compared to those expressed more fully by Sir Jack I H Jacob in trenchant terms in his Hamlyn lecture as follows:
'The need for public justice, which has now been statutorily recognised, is that it removes the possibility of arbitrariness in the administration of justice, so that in effect the public would have the opportunity of "judging the judges": by sitting in public, the judges are themselves accountable and on trial. This was powerfully expressed in the great aphorism that, "It is not merely of some importance but is of fundamental importance that justice should not only be done but should manifestly and undoubtedly be seen to be done." The opposite of public justice is of course the administration of justice in private and in secret, behind closed doors, hidden from the view of the public and the press and sheltered from public accountability. There are, indeed, two prevailing exceptions to the open public system of conducting civil proceedings, namely, (1) the hearing of pre-trial proceedings "in Chambers," at which only the parties and their advisers are entitled to be present and from which the public and the press are excluded, and (2) the hearing of proceedings or the trial or part thereof "in Camera," where the court or the trial judge orders that the court should be closed or cleared and the public and press excluded. Both these exceptions may be necessary in matters which require protection from publicity, such as matters concerning national security, those relating to persons under disability, i.e. minors and mental patients, or those relating to secret processes and other special matters, such as hearings before the Commissioners of Inland Revenue relating to tax affairs and such like matters. Subject to these exceptions, the principle of publicity should prevail throughout the whole range of civil proceedings. For this reason, the practice of hearing pre-trial applications in Chambers should be abrogated. The strange and perhaps indefensible contrast between the hearing of the interlocutory applications for an injunction, in open court in the Chancery Division, and in private in Chambers in the Queen's Bench Division, should be the first and immediate practice to be scrapped.' (See Hamlyn Lectures (38th series) The Fabric of English Justice p 22)."
"However it remains a principle of the greatest importance that, unless there are compelling reasons for doing otherwise, which will not exist in the generality of cases, there should be public access to hearings in chambers and information available as to what occurred at such hearings. The fact that the public do not have the same right to attend hearings in chambers as those in open court and there can be in addition practical difficulties in arranging physical access does not mean that such access as is practical should not be granted. Depending on the nature of the request reasonable arrangements will normally be able to be made by a judge (of course we use this term to include masters) to ensure that the fact that the hearing takes place in chambers does not materially interfere with the right of the public, including the media, to know and observe what happens in chambers. Sometimes the solution may be to allow one representative of the press to attend. Another solution may be to give judgement in open court so that the judge is not only able to announce the order which he is making, but is also able to give an account of the proceedings in chambers. The decision as to what to do in any particular situation to provide information for the public will be for the discretion of the judge conducting the hearing. As long as he bears in mind the importance of the principle that justice should be administered in a manner which is as open as is practical in the particular circumstances, higher courts will not interfere with the judge's decision unless there is good reason for doing so.
With this guidance it should be possible to meet the concerns rightly emphasised by Sir Jack Jacob and at the same time retain most, if not all, the advantages provided by the informality of appearing in the judges' chambers for the disposal of interlocutory matters.
The nature of the hearing being that which is indicated, while lawyers will be expected to continue to exercise self restraint as to what is said, any order, judgment or account of the proceedings in chambers can, except in the special cases, be communicated to those who did not attend without any concern that such a communication will create any risk of the imposition of a penalty. If the court wishes to restrain such communication, then it will have to make an appropriate order, when it has the power to do so. As to those situations it is important to take account of the judgment of Lord Reading CJ in R v Governor of Lewes Prison, ex p Doyle  KB 254 at 271 where he drew attention to the fact that it was impossible to enumerate all the circumstances which would justify an exception to the general rule. As the practice of the courts alters, for example because of the developments in relation to alternative dispute resolution, so will the exceptions change."
"1. In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. Judgment shall be pronounced publicly but the press and public may be excluded from all or part of the trial in the interest of morals, public order or national security in a democratic society, where the interests of juveniles or the protection of the private life of the parties so require, or to the extent strictly necessary in the opinion of the court in special circumstances where publicity would prejudice the interests of justice".
"[S]pecial leave is I think a stronger expression than permission which is used in the CPR. A good case has to be made out for obtaining special leave and there is, I think, not the same presumption that certain documents should be available for inspection by anyone who cares to ask".
"1. Open justice. The words express a principle at the heart of our system of justice and vital to the rule of law. The rule of law is a fine concept but fine words butter no parsnips. How is the rule of law itself to be policed? It is an age old question. Quis custodiet ipsos custodies – who will guard the guards themselves? In a democracy, where power depends on the consent of the people governed, the answer must lie in the transparency of the legal process. Open justice lets in the light and allows the public to scrutinise the workings of the law, for better or for worse. Jeremy Bentham said in a well known passage quoted by Lord Shaw of Dunfermline in Scott v Scott  AC 407, 477:
'Publicity is the very soul of justice. It is the keenest spur to exertion and the surest of all guards against improbity. It keeps the judge himself while trying under trial'.
2. This is a constitutional principle which has been recognised by the common law since the fall of the Stuart dynasty, as Lord Shaw explained. It is not only the individual judge who is open to scrutiny but the process of justice.
4. There are exceptions to the principle of open justice but, as Viscount Haldane explained in Scott v Scott, they have to be justified by some even more important principle. The most common example occurs where the circumstances are such that openness would put at risk the achievement of justice which is the very purpose of the proceedings."
"Unless some contrary argument can be made out, the courts should assist rather than impede such an exercise. The reasons are not difficult to state. The way in which the justice system addresses international corruption and the operation of the Extradition Act are matters of public interest about which it is right that the public should be informed. The public is more likely to be engaged by an article which focuses on the facts of a particular case than by a more general or abstract discussion" (paragraph 77).
"83. The courts have recognised that the practice of receiving evidence without it being read in open court potentially has the side effect of making the proceedings less intelligible to the press and the public. This calls for counter measures. In SmithKline Beecham Biologicals SA v Connaught Laboratories Inc Lord Bingham referred to the need to give appropriate weight both to efficiency and to openness of justice as the court's practice develops. He observed that public access to documents referred to in open court might be necessary. In my view the time has come for the courts to acknowledge that in some cases it is indeed necessary. It is true that there are possible alternative measures. A court may require a document to be read in open court, but it is not desirable that a court should have to take this course simply to achieve the purpose of open justice. A court may also declare that a document is to be treated as if read in open court, but that is merely a formal device for the exercise of a power to allow access to the document. I do not see why the use of such a formula should be required. It may have the advantage of ensuring that other parties have an opportunity to comment, but that can equally be achieved if, in a case such as the present, the Applicant is required to notify the parties to the litigation of the application.
85. In a case where documents have been placed before a judge and referred to in the course of proceedings, in my judgment the default position should be that access should be permitted on the open justice principle; and where access is sought for a proper journalistic purpose, the case for allowing it will be particularly strong. However, there may be countervailing reasons. In company with the US Court of Appeals, 2nd Circuit, and the Constitutional Court of South Africa, I do not think that it is sensible or practical to look for a standard formula for determining how strong the grounds of opposition need to be in order to outweigh the merits of the application. The court has to carry out a proportionality exercise which will be fact-specific. Central to the court's evaluation will be the purpose of the open justice principle, the potential value of the material in advancing that purpose and, conversely, any risk of harm which access to the documents may cause to the legitimate interests of others."
(a) that the administration of justice should be open, which includes openness to journalistic scrutiny;
(b) that such openness extends not only to documents read in court but also to documents put before the judge and thus forming part of the decision-making process in proceedings;
(c) that openness should be the default position of a court confronted with an application such as this;
(d) however, there may be countervailing reasons which may constitute grounds for refusing access;
(e) the court will thus in each case need to carry out a fact-specific exercise to balance the competing considerations.
Plainly those principles, like the authority itself, apply to proceedings of all kinds, including insolvency proceedings.
(a) it should start from a strong presumption in favour of access to documents read by the court; but
(b) the presumption could be departed from when there were countervailing reasons operating against it.
Plainly, on the authorities, that is the correct approach.
(a) The legitimate public interest in Ireland (and possibly this country and elsewhere) in the affairs of someone said to be well known in Ireland as both a businessman and someone with political connections.
(b) The size of the respondent's bankruptcy, which arguably in itself is of legitimate public interest.
(c) The fact that the respondent's bankruptcy has come about in the context of what has happened to the Irish economy and the subsequent need to rescue that economy at the expense of Irish and other taxpayers.
(d) The appropriateness of a journalistic investigation as to whether lending to the respondent and/or his companies was properly secured.
(e) The legitimate public and press interest in the emigration of Irish citizens with a view to their establishing their centre of main interests here so as to enable them to take advantage of the jurisdiction of the English courts and our liberal bankruptcy regime, and the desirability of scrutinising (as far as possible) the decision to make bankruptcy orders in such cases.
(f) The fact that Mr Tighe is a serious financial journalist and the assurance that he has no intention of writing a "celebrity" story.
(a) The applicant is simply embarking on a fishing expedition.
(b) Only creditors and/or the official receiver have a legitimate interest in the court file.
(c) The respondent deserves a respite. Protection of a debtor is one of the purposes for which a bankruptcy order is made. He should not be exposed to public opprobrium resulting from unwarranted publicity. There is also a policy consideration: the threat of publicity is something which could put other debtors off seeking relief by way of bankruptcy.
(d) Press interest could only be prurient.
(e) It is inappropriate for a journalist to seek to "delve into the mind of the registrar" as to his reasons for making a bankruptcy order.
(f) The issue of "bankruptcy tourism" has already been extensively aired in the press. Continuing to air it cannot now be a legitimate matter of public interest.
(g) Access to the documents could mean access to information that should be protected by the confidentiality that normally attaches to a banker/client relationship.
(h) The petition and accompanying papers were considered by the registrar in chambers so should not be available for general access.
UPON THE APPLICATION OF Times Newspapers Ltd of 4th Floor, 2 Thomas More Square, London E98 1LG for an order as set out in the application notice of 28 November 2012
AND UPON READING the first and second witness statements of Barney Monahan, the solicitor for the Applicant, dated 11 March 2013 and 27 June 2013 and the first and second witness statements of Michael Bernard McNamara, the Respondent, dated 6 June 2013 and 5 July 2013
AND UPON HEARING counsel for the Applicant, the Respondent neither attending nor being represented
AND UPON the court accepting Times Newspapers Ltd's undertaking not to disclose, whether by itself, its directors, its employees, servants or agents or otherwise howsoever, any private information contained on the court file in case number 5384 of 2012 (Michael Bernard McNamara) consisting of the residential address(es), telephone number(s), email address(es), or social security or tax reference number(s) of the Respondent or any member of his family, or any health, medical, sexual, or therapeutic information pertaining to those individuals
IT IS ORDERED THAT:
Dated 18th July 2013.