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You are here: BAILII >> Databases >> Supreme Court of Ireland Decisions >> Dunnes Stores Ireland Company v. Ryan [2002] IESC 7 (1 February 2002) URL: http://www.bailii.org/ie/cases/IESC/2002/7.html Cite as: [2002] IESC 7, [2002] 2 IR 60 |
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1. The
facts in this case are largely not in dispute and can be summarised as follows.
On the 11th September, 1997, the second named respondent/appellant (hereafter
“the Minister”) wrote to the third named applicant/respondent
(hereafter “Mrs Heffernan”) stating:
2. The
report referred to was that of a tribunal established under the Tribunals of
Inquiries Acts, 1921 to 1998, of which the sole member was Mr. Justice
McCracken. The remit of the Tribunal was to enquire into certain payments
alleged to have been made to Mr. Charles Haughey T.D. and Mr. Michael Lowry
T.D. It is not in dispute that payments had been made by the first and second
named Applicants (hereafter “the companies”) to the two persons
concerned and to companies with which they, or members of their family, were
associated. This was found to be a fact by the Tribunal in its report and it
is also not in dispute that the payments were made at a time when the companies
were effectively under the stewardship of Mr. Ben Dunne. The payments came to
light as a result of proceedings which were instituted by other shareholders
and directors of the companies, including Mrs. Heffernan, against Mr. Ben
Dunne. Those proceedings were ultimately the subject of a settlement between
the parties. Mrs. Heffernan and her brother, Mr. Frank Dunne had also
appointed a firm of accountants, Price Waterhouse, to carry out an independent
inquiry into the manner in which the affairs of the company had been conducted
under Mr. Ben Dunne’s stewardship. That report was made available both
to His Honour Judge Buchanan, who at the request of the government carried out
an initial inquiry into the question of the irregular payments, and to the
tribunal presided over by Mr. Justice McCracken.
3. Following
the receipt of the letter of 11th September from the Minister, Mrs. Heffernan
wrote to her expressing her concern that the companies should be subjected to a
further inquiry which, she claimed, was unnecessary and would result in further
damaging publicity to the companies. There followed further correspondence
between the companies and the Minister’s officials concerning her
request, in which the companies, while indicating their willingness to
co-operate with the Minister and furnishing her with any documents she
required, expressed their anxiety at the wide ranging nature of the requests
emanating from the Minister and the difficulties facing the companies in
meeting her requests. Ultimately on the 22nd July, 1998, the Minister wrote as
follows:-
5. Mrs.
Heffernan replied on the 22nd July expressing her surprise at the proposal to
appoint an authorised officer, but on the same day, Mr. Maloney wrote to her
informing her that he had been so appointed by warrants signed by the Minister
on that day. The warrants were in the following terms:-
6. Mr.
Maloney wrote again on the 24th July, to Mrs. Heffernan enclosing a schedule of
documentation which he said he required for the purposes of his examination.
7. On
the 4th August, 1998, the companies were given leave by the High Court to apply
by way of judicial review for orders of
certiorari
quashing the decisions of the Minister to appoint Mr. Maloney as an authorised
officer pursuant to s. 19 of the 1990 Act on two principal grounds, i.e.
8. Mr.
Maloney at a later date resigned and was replaced as the authorised officer by
the first named respondent, Mr. Gerard Ryan, and the alleged conflict of
interest accordingly ceased to be of any relevance.
9. A
statement of opposition having been filed on behalf of Mr. Maloney and the
Minister, the hearing of the substantial issues came on before Laffoy J. In a
reserved judgment, reported
sub
nom
Dunnes
Stores Ireland Company and
Others
-v- Maloney and Anor
at (1999) 3 I.R. 543, Laffoy J granted the relief sought on the ground that the
companies were entitled to be informed of the reasons which formed the basis of
the Minister’s decision to appoint an authorised officer, saying:-
10. Laffoy
J. also held that the extent of the demand for documents made by the authorised
officer was excessive and unreasonable, saying:-
11. While
concluding that the companies were entitled to the relief which they claimed,
Laffoy J. placed a stay on the orders until a specified date in order to enable
the Minister, if so minded, to give reasons for her decision. On the 27th
November, 1998, Mr. Paul Appleby, Principal of the Company Law Administration
Section of the Minister’s department swore an affidavit, the Schedule to
which set out the purported reasons for the appointment of the authorised
officer.
12. Under
the heading,
“Dunnes
Stores Ireland Company s.19 (2)(a)”
,
the
Schedule stated
:-
13. Under
the heading “
s.
19 (2)(b)(ii) of the 1990 Act
”,
the Schedule states:-
14. There
follow details of two payments of £395,107 from Dunnes Stores Ireland
Company to finance improvements to Mr. Lowry’s house at Holycross and of
£27,502.75 from the same company via the Bank of Ireland Marino to Mr.
Lowry. In both cases, the report of Mr. Justice McCracken is cited as
indicating that these payments were made to assist Mr. Lowry evade tax. It is
then stated that:-
16. There
follow references to passages in the report of Mr. Justice McCracken disclosing
that a large number of payments were made to various parties from an account in
the Marino branch of the Bank of Ireland, which were acknowledged to be the
property of Dunnes Stores. It was pointed out that some 63% of the payments
were found by the Buchanan Report to have been made beneficiaries could not be
identified. The report of Mr. Justice McCracken is also cited as indicating
that profits of two companies associated with Dunnes Stores in the far east
were remitted to a company called Tutbury Limited which was under the control
of Mr. Ben Dunne. The report of Mr. Justice McCracken is also cited as
indicating that payments of £182,632 sterling and £282,500 sterling
were made from Dunnes Stores (Bangor) Limited for the benefit of Mr. Charles
Haughey were which subsequently lodged to a suspense account of the Dunnes
Stores Ireland Company, but that no benefit had been received by the Dunnes
Stores Group in respect of these payments. This part of the Schedule concludes
as follows:-
17. Under
the heading “
s.
19(2)(f) of the 1990 Act
”,
the Schedule states that there are circumstances suggesting that a series of
acts or omissions of the body or are likely to be unlawful. The particulars
given of this are the payments already mentioned from the Marino account,
payments made to Streamline Enterprises for the benefit of Mr. Michael Lowry,
three payments from Dunnes Stores Ireland Company totalling £180,000 and
payable to cash, the ultimate beneficiaries of which were apparently a company
called Celtic Helicopters Limited and Mr. Desmond Traynor and the failure of
Dunnes Stores Ireland Company to obtain auditor’s certificates for the
financial period ended 31st December, 1992 and a number of subsequent years.
The McCracken Report was also cited for the conclusion that the payment to
Streamline Enterprises had been made contrary to the then existing exchange
control legislation. This part of the Schedule concludes:-
18. Under
the heading “
Dunnes
Stores (Ilac Centre) Limited; s. 19(2)(a) of the 1990 Act
”,
the Schedule states:-
19. Under
the heading “
s.
19(2)(b)(ii)
”,
it is stated that:-
20. There
follow references to the payments already referred to of £395,107 to
finance the improvements to Mr. Lowry’s house.
22. There
is then a further reference to the payments of £395,107 in respect of the
improvements to Mr. Lowry’s house, which, it is stated, appeared to have
been falsely charged as capital expenditure in the accounts of Dunnes Stores
(Ilac Centre) Limited. The Schedule concludes:-
23. The
applicants/respondents were dissatisfied with the reasons as thus set out in
the Schedule. They also claimed that the Minister’s department was
disseminating information which it was obtaining from the
applicants/respondents to the media without their consent. In addition, they
claimed that the demand made by the Minister for the production of documents
was unreasonable both in its extent and the time allowed for compliance and
that the applicants feared that it would be used as the justification for the
criminal prosecution of the applicants/respondents and an application for a
search warrant with attendant unfavourable publicity.
24. On
the 22nd December, 1998, the Minister’s department responded to a request
pursuant to the Freedom of Information Act 1997 by the applicants/respondents
as to the reasons of the Minister for appointing an authorised officer. This
included a memorandum by Mr. Paul Appleby circulated
inter
alia
to the Minister in which he stated that :-
26. Following
a request by the first named respondent for a meeting with officers of the
companies to discuss the provision of books and documents, the solicitors for
the companies, on the 6th January, 1999, sought a meeting with the first named
respondent. This suggestion was rejected by the first named respondent. On
the 18th January he wrote to Mrs. Heffernan requesting the production of
various categories of documents.
27. The
present proceedings were then instituted beginning with an application to the
High Court for leave to apply by way of an application for judicial review for
specified reliefs. These proceedings, in addition to seeking
inter
alia
relief by way of certiorari quashing the decision of the Minister to appoint
the authorised officer, also claimed declarations that the provisions of
s.19(5) and (6) of the 1990 Act were invalid having regard to Articles 38.1 and
40.1 of the Constitution.
28. The
High Court having given the leave sought by the applicants, a statement of
opposition was filed on behalf of the respondents. The hearing of the motion
having come on before the High Court, the claim on behalf of the applicants
that the appointment by the Minister of the first named respondent as an
authorised officer was invalid was rejected. It was also concluded, however,
that the first named respondent had acted unreasonably in requiring the books
and records specified by him and, since that relief had not been claimed on
behalf of the applicants, they were given liberty to amend their statement of
grounds so as to include that claim. The High Court judge made no finding as
to the constitutionality of the 1990 Act and an appeal was brought to this
court. This court set aside the order of the High Court in its entirety, in a
written judgment delivered on the 8th of February 2000, and the proceedings
were remitted to the High Court for a determination of the issues in respect of
which leave to apply for judicial review was granted including, if necessary,
the constitutional issue.
29. That
hearing came on before Butler J. in the High Court and the evidence adduced at
the hearing consisted of, in addition to evidence on affidavit, a transcript of
the evidence at the earlier hearing in the High Court. In a written judgment
delivered on the 29th of July 2000, the learned High Court judge concluded that
the applicants/respondents were entitled to an order of certiorari in respect
of the decision of the Minister purporting to appoint an authorised officer to
examine the books and records of the companies and the decision of the first
named respondent by which the first named respondent purported to require from
Mrs Heffernan the books and records set out in a letter dated the 18th of
January 1999. From that judgment and order, the first named respondent and the
Minister now appeal to this court.
30. In
his judgment, Butler J. having set out the relevant statutory provisions, said
that the essential issue was as to whether the reasons ultimately furnished by
the Minister sustained her decision to appoint an authorised officer. He found
that there was no evidence that it was “necessary” to examine the
books and documents of the company in order to determine whether an inspector
should be appointed to conduct an investigation of Dunnes Stores Ireland
Company under the Companies Acts. He further found that the reason given by
the Minister that it was necessary to examine the books and documents of the
same company in order to determine whether payments by or on behalf of the
company were made for the purpose of further defrauding the Revenue
Commissioners or the creditors of any other person was unsustainable. The
learned judge said that the Minister had no right to pass on any information
gained as a result of such an examination, since the revenue was not listed as
a “competent authority” under s.21 of the 1990 Act, which empowers
the Minister to furnish information obtained as a result of such an examination
to a number of specified bodies.
31. As
to the Minister’s statement that there were circumstances suggesting that
the affairs of the company had been conducted with intent to defraud its
members or in a manner which was unfairly prejudicial to some part of its
members, the learned judge accepted the contention made on behalf of the
applicants/respondents that it was “stretching credulity too far”
to contend that the Minister had appointed an authorised officer out of concern
for members of the Dunnes family who, long before the 22nd July 1998, had
compromised their differences and gone their separate ways. He rejected as
invalid the reason given by the Minister that she was entitled to examine the
books and documents of Dunnes Stores Ireland Company because of unlawful acts
or omissions on the part of Dunnes Stores Ireland Company, i.e. their breach of
exchange control legislation and their failure to obtain auditor’s
certificates for a number of specified periods. He held that the provisions of
s.19(2)(f) merely entitled the Minister to make an appointment in respect of
acts or omissions which are or are likely to be unlawful and that this
envisaged contemporaneous or ongoing illegality and not illegality which had
happened in the past.
32. The
learned judge said that in deciding whether the Minister had acted unreasonably
in making the appointment on these grounds he had applied the test laid down by
this court in
The
State(Keegan) -v- Stardust Victims Compensation Tribunal
(1986)
I.R. 642.
33. The
learned High Court judge went on in his judgment to consider the other grounds
on which leave had been granted to seek judicial review, but said that he was
satisfied that the applicants/respondents had not established that the Minister
had failed to have due regard for the principles of natural and constitutional
justice and/or fairness, had undertaken an enquiry which was disproportionate
and excessive in its ambit or had served a demand for documentation which was
unreasonable and/or
ultra
vires
and/or vexatious.
34. However,
having reached the conclusion that the appointment of the authorised officer
was unlawful the learned judge was of the view that he should not go on to
consider whether the relevant provisions of the 1990 Act were invalid having
regard to the provisions of the Constitution. It is not contested that his
decision not to do so was in accordance with the accepted jurisprudence of this
Court.
35. It
was submitted on behalf of the appellants/respondents that the Minister was
entitled to appoint the authorised officer where she was of the opinion that
there were “circumstances suggesting” that it was necessary to
examine the books and documents of the body with a view to determining whether
an inspector should be appointed to conduct an investigation under the
Companies Acts and that the various payments referred to in the Report of Mr
Justice McCracken constituted such circumstances. It was further submitted
that the fact that the Revenue Commissioners were not a “competent
authority” did not preclude the Minister from appointing the officer on
the ground that the affairs of both companies were being conducted with intent
to defraud the Revenue Commissioners, who were clearly “creditors of
another person” within the meaning of s.19(2)(v)(ii). The Revenue were
entitled to be supplied with information pursuant to s.21(1) of the 1990 Act
with a view to the institution of criminal proceedings. That was confirmed by
the fact that the Director of Public Prosecutions was also not named as a
“competent authority” under s.21(1).
36. It
was further submitted that the making of a complaint by any members of a
company was not a necessary precondition to an authorised officer being
appointed where there was a concern that the affairs of the company were being
conducted with the intent of defrauding any of its members. It was also
submitted that there was in any event no evidence of proceedings concerning
differences between members of the company - as distinct from members of the
Dunne family - having been previously compromised.
37. It
was further submitted that the fact that the relevant wrongdoing had been
committed in the past did not prevent s.19(1)(f) from having effect. A
completed act, it was said, does not cease to be unlawful once it has been
committed: it is in a continuing state of unlawfulness.
38. It
was finally submitted that the finding by the learned High Court Judge that the
decision of the Minister to appoint an authorised officer “plainly flew
in the face of fundamental reason and common sense” within the
formulation in
Keegan
was wholly dependent on his construction of s.19(2). If, as was submitted on
behalf of the first named respondent and the Minister, his construction of the
provisions, as they are to be applied to the present case, was erroneous, then
the appointment was clearly justified and the criteria laid down in
Keegan
were not relevant.
39. It
was submitted on behalf of the applicants/respondents that the Oireachtas
clearly did not intend a direction under s.19 or the appointment of an
authorised officer to be a licence to range at will through the books and
records of a company. Where, as here, an authorised officer had been
appointed, he had to identify specific documents to be produced: he could not
be appointed so as to conduct what Laffoy J. had correctly described as a
“trawl” through the company’s books and documents. It was
clear from the documents discovered under the Freedom of Information Act, 1997
that the Minister did not require the production of books and documents so as
to ground an application to the Court for the appointment of an inspector: she
had deliberately chosen to go down the route of an application under s.19
because, on the advice of her officers, she thought it would be more immune to
a judicial review challenge.
40. As
to the claim that the examination of the books and records was required in
order to determine whether or not payments had been made for the purpose of
defrauding the Revenue Commissioners, it was submitted that the Minister had no
functional responsibility for tax collection and that there was nothing to
indicate that there was any concern on the part of the revenue as to the tax
status of the applicants/respondents: it had been expressly conceded on behalf
of the Minister that there had been no evasion of tax by any of the companies
in the group.
41. It
was further submitted that it had never been contended on behalf of the
applicants/respondents that an appointment could only be made on the grounds
specified in s.19(2)(b)(iii) where the members of the company had lodged a
complaint: merely that, in determining whether the decision of the Minister was
rational and factually sustainable, the court was bound to have regard to the
fact that the members of the companies concerned had compromised their
differences and there was no longer any ground for holding that the company was
being conducted in a manner which required any intervention by the Minister.
It was also submitted that the contention on behalf of the Minister that there
was no evidence that the members of the Dunne family were in fact members of
the company, was a wholly unjustifiable attempt to bolster the reasons already
furnished by the Minister: it had been uncontroverted at every stage of these
and the earlier proceedings that the applicant/respondent companies are members
of the Dunnes Stores Group and that the ownership of that group is ultimately
vested in the surviving members of the Dunne family, with the exception of Mr
Ben Dunne.
42. It
was further submitted that the learned High Court judge was correct in his
construction of s.19(2)(b): the draftsman must be presumed to have deliberately
used the present tense in that provision, in contrast to the past tense used in
the other provisions and, accordingly, it is properly construed as having
regard to ongoing unlawfulness.
43. As
to the submission that the applicants/respondents were estopped from
challenging the validity of the appointment by virtue of the letters written by
their solicitor on 5th and 6th January 1999, it was submitted that this was
without any legal foundation: the first named respondent and the Minister would
have to demonstrate that they had acted in some way to their detriment on the
faith of the alleged representations and a delay of some ten working days in
seeking to act on foot of the purported appointment could not conceivably be
regarded as such detriment.
44. The
section goes on to provide in s.s.(5) that it is to be a criminal offence for a
person or body not to comply with the requirements made under the section.
45. The
expression “competent authority” is defined in sub-section (3), but
does not include the Revenue Commissioners: they were, however, added as a
competent authority by s.21 of the Companies (Amendment) Act, 1999.
46. Although
the powers conferred on the Minister by s.19 may be availed of as a preliminary
to the appointment of an inspector by the High Court to conduct an
investigation of a company under the Companies Acts, it is clear that this is
not the only context in which those powers may be invoked. The Oireachtas has
given the Minister a general supervisory jurisdiction over companies formed
under the Acts and undoubtedly one of the most important powers which he or she
enjoys is that of applying to the High Court for the appointment of an
inspector under s.8(1) of the 1990 Act. However, the Acts - and, in
particular, the 1990 Act - also confer other important powers on the Minister,
including the power to investigate the ownership of companies (s.14) and to
obtain a search warrant from the District Court and seize books or documents
whose production has been required under other provisions (s.20). The Minister
is also normally the prosecuting authority in respect of summary offences
created by the Acts.
47. The
Oireachtas thus has assigned to the Minister, as the appropriate officer of
State, significant powers to ensure that companies incorporated under the Act
do not abuse the privileges which incorporation confers on them to the
detriment of their members, their creditors or indeed the public in general.
That has been a recognised function of the Minister and her statutory
predecessor since the first decade of the twentieth century.
48. Such
statutory powers can only be exercised for the purposes for which they have
been granted and, as Laffoy J. held in
Dunnes
Stores Ireland Company and Ors -v- Maloney and Anor
.,
they are liable to be set aside by the High Court in judicial review
proceedings where their invocation is not justified. In particular, the
exercise by the Minister of the powers conferred by the section can be set
aside when the reasons given for invoking the section make it clear that they
are being used for a purpose not contemplated by the Oireachtas. It is also
clear that they can be set aside where, as indicated by this court in
Keegan,
the relevant authority has sought to operate them in a patently irrational
fashion.
49. The
power conferred on the Minister by s.19 is two fold: either to direct herself
the production by the company of the specified books or documents or, if she
thinks there is good reason so to do, to authorise any of her officers to
require the body to produce books or documents specified by that officer.
While the limitations indicated by s.s.(4) as to the circumstances in which the
Minister may properly give such directions do not, in terms, extend to the
appointment of an authorised officer under s.s.(4), it seems unlikely in the
extreme that the draftsman envisaged that the Minister, by appointing an
authorised officer rather than by giving directions herself, could secure the
production of books or documents in circumstances other than those set out in
s.s.(2). However, in any event, the reasons given in the Schedule for the
appointment of the first named respondent all relate to the circumstances
specified in s.s.(2).
50. The
first of these is - adopting the wording of s.19(2)(a) - the circumstances
outlined under the heading which follow which, it is said, gave substantial
cause for concern as to the standards of “corporate governance”
operating in Dunnes Stores Ireland Company and suggested that it was necessary
to examine the books and documents in order to determine whether an inspector
should be appointed to conduct an investigation under the Companies Acts. This
reason, of itself, couched as it is in such general terms, could not justify
the appointment of the authorised officer and, as its wording suggests, it is
necessary to examine the reasons subsequently given to determine whether they
afford a sufficient basis for the appointment.
51. The
first of the following grounds is that there are circumstances suggesting that
the affairs of Dunnes Stores Ireland Company have been conducted with intent to
defraud the creditors of another person, i.e. the Revenue Commissioners.
Assuming that the Revenue Commissioners are properly described as a
“creditor” of a person who is in default in the payment of tax, I
am satisfied that the stated reason could not have afforded any basis for the
appointment of an authorised official to examine the books and records of the
company. Mr Justice McCracken had found in his report that the relevant
payments had been made by the company in order to assist Mr Lowry to evade tax
and an examination of the books and documents of the company was superfluous if
it was for the purpose of establishing whether the payments had been made for
that purpose. While it may be possible to envisage circumstances in which even
the ample powers available to the Revenue Commissioners are not sufficient to
enable them to ascertain whether the affairs of a company are being carried out
in order to evade the payment of tax, and the examination by the Minister of
the books and documents of the company may in the result be justified under
s.19(2)(b)(ii), this was certainly not such a case.
52. The
next reason is that there are circumstances suggesting that the affairs of the
company have been conducted with intent to defraud its members or in a manner
which is unfairly prejudicial to some part of its members. It is, of course,
not in dispute that there were serious differences between the members of the
Dunne family as to the manner in which the affairs of the Dunnes Stores Group
of companies had been conducted during the period of Mr. Ben Dunne’s
stewardship. Those differences led to proceedings in the High Court which were
ultimately the subject of a compromise. Since then, Mr Ben Dunne has severed
his links with the Dunnes Stores Group of companies. There is no indication of
any sort that any of the members of this company or any of the Dunnes Stores
Group of companies have any continuing concern with the manner in which their
affairs were conducted in the past. It might seem surprising that powers
conferred by the Oireachtas on the Minister to interfere in the affairs of a
private company by examining their books and documents could be invoked in
circumstances where none of the members had any complaints as to the manner in
which its affairs were being conducted and any complaints that existed in the
past had been the subject of a final settlement. It is to be noted, however,
that the Minister’s powers under the section arise, not merely where the
affairs of the body
are
being
,
but also where they
have
been
,
conducted in such a manner. I shall return at a later point to the question as
to whether the circumstances were such as to justify the Minister’s
invocation of her powers on this particular ground.
53. The
next reason given was that there were circumstances suggesting that a series of
acts or omissions of the body “are or are likely to be unlawful”.
The first category of acts or omissions relied on are the payments made from
the Marino branch of the Bank of Ireland to beneficiaries some of whom have not
been identified. The same suggestion is made in respect of the payments to
Streamline Enterprises, Celtic Helicopters Limited and Mr Desmond Traynor. It
is also suggested that the payments to Streamline Enterprises may have been
made contrary to exchange control legislation in force at the time. It is also
stated that Dunnes Stores Ireland Company failed to obtain auditor’s
certificates for a number of subsequent years.
54. The
Minister is the competent prosecuting authority in respect of summary offences
created by the Companies Acts. If offences in relation to the keeping of
proper books of accounts or the laying of audited accounts before the Annual
General Meeting of the company in each calendar year have been committed by the
company, she is the appropriate body to institute such proceedings. While she
has no function in relation to the exchange control legislation which was in
existence at the time of the payments to Streamline Enterprises, she is in a
position to furnish to the appropriate authorities the information in her
possession as to the apparent breach of those regulations, if indeed those
authorities are not already aware of the possible breaches since they are
manifestly in the public domain as a result of the publication of Mr Justice
McCracken’s report. There is no indication as to what purpose would be
served in this context by an examination of the books and documents of the
company by an authorised officer. There is no suggestion in the Schedule that,
at the time the Minister appointed the authorised officer, the company was not
keeping proper books of account, was not laying its audited accounts before the
Annual General Meeting or was acting in breach of the exchange control
regulations. The language used in s.20(2)(f), using as it does the present
tense in contrast to the past tense employed in other subparagraphs, makes it
clear that the examination of books or documents authorised under that
subparagraph is related to continuing or future illegal acts or omissions of
the company and not to acts or omissions which have occurred in the past. I am
satisfied this reason affords no basis for the appointment of an authorised
officer to examine the books and documents of the company.
55. There
remains the question as to whether the invocation by the Minister of her powers
on the ground that there were circumstances suggesting that the affairs of the
company had been conducted in a manner which was unfairly prejudicial to some
part of the members was justified.
56. The
purpose of an inspection in such circumstances is not solely to determine
whether the affairs are being so conducted: the power may arise in a case
where, as here, it is beyond argument that they had been so conducted in the
past. They may be invoked in such circumstances because the Minister, in the
exercise of her supervisory jurisdiction over companies, may be concerned to
establish how such a misuse of the privilege of incorporation took place with a
view to ensuring, so far as possible, that similar abuses do not take place in
this, or indeed any other companies regulated by the Acts, in the future.
57. The
argument advanced on behalf of the applicants/respondents, while superficially
attractive, rests essentially on the fallacious proposition that, because the
controlling shareholders in the companies have taken the necessary steps to put
an end to the conduct of the companies which they regarded as detrimental to
their commercial interests, the interest of the Minister is also at an end.
That is clearly not so: the Minister remains under a statutory duty to take
whatever steps are open to her to satisfy herself as to the reasons which led
to the use by the person then in control of those assets for purposes which, in
terms of the relevant Acts and the constitution of the companies concerned,
were clearly unlawful. It is unnecessary to embark in this case on a
consideration of the circumstances, frequently a matter of controversy, in
which payments may be made on behalf of a company which are of no discernible,
immediate and direct benefit to the company: it is sufficient to say that, in
the light of the findings of Judge Buchanan and Mr. Justice McCracken the
payments made in the present case could not be regarded as having any
conceivable legal justification.
58. The
Minister was clearly entitled to conclude that an examination carried out by
her of the books and records of the company would throw greater light on an
issue which was not of any great significance in the context of the inquiry
being conducted by Mr. Justice McCracken, i.e., as to how, given the complex
and detailed requirements of the legislation as to the keeping of records by
companies, the auditing of their accounts and the access of directors to the
companies records, it was possible for these payments to be made without the
knowledge or approval of the other directors and the companies auditors. The
results of such an examination might, in turn, lead the Minister to the
conclusion that the existing safeguards, however detailed, in the legislation
against such abuses of the privilege of incorporation, were not adequate. The
fact that the conduct which the other directors and shareholders saw as being
inimical to the their interests had now ceased would not necessarily be a
relevant factor in the Minister’s determination as to whether such an
inquiry should be undertaken by her.
59. That
inquiry is justified, in terms of the section, where
inter
alia
there are circumstances suggesting that the affairs of the body have been
conducted in a manner which was unfairly prejudicial to some part of its
members. That precondition was, beyond argument, fulfilled in the present
case.
60. The
documents sought pursuant to s.19 are described in a letter dated 18th January
1999 from Mrs. Gerard Ryan to Mrs. Margaret Heffernan as follows:
61. It
may be that this requirement which is couched in necessarily general terms may
cause particular problems for the companies in some areas: if that is the case,
any difficulties can be identified by the companies and I see no reason to
suppose that the authorised officer, if satisfied that the difficulties were
real, would not endeavour to meet any legitimate concerns of the company. I am
satisfied that the range of documents sought is not unduly extensive, having
regard to the scale of the misuse of the company’s assets which has
already been identified.
62. In
the judgment which he will delkiver this morning, Herbert J analyses the
circumstances in which the Minister may give a direction such as was given in
this case in exclusive reliance on s 19(2)(a) of the 1990 Act. I agree entirely
with what he says and have nothing to add.
In
his judgment, Murray J discusses the question as to whether this court should
consider the question of the constitutionality of an Act even where the case
can, as here, be disposed of on other grounds. I agree that this matter may
require reconsideration: I am also of the view that any such reconsideration
should extend to the question as to whether the High Court is necessarily and
invarianbly precluded from reaching the constitutional issue where the case can
be decided on other grounds. I would, however, reserve both questions to a
case in which they are fully argued.
63. I
would, accordingly, allow the appeal on those grounds. Since, however, the
issue as to the constitutionality of the relevant statutory provisions remains
to be determined, I would remit the matter to the High Court so that that issue
can be resolved.
64. By
letter dated the 22nd July, 1998 the Second Named Respondent/Appellant
(hereafter “The Minister”) wrote to the Third Named
Applicant/Respondent,
65. Mrs
Margaret Heffernan, informing her of her decision to appoint an authorised
officer to examine books and documents of the First and Second Named
Applicants/Respondents pursuant to Section 19 of the Companies Act 1990.
66. In
these proceeding the Applicants/Respondents (hereafter Dunnes) have challenged
the lawfulness of that decision. In the proceedings before the High Court, the
learned High Court Judge found in favour of Dunnes and held that the
appointment of the First Named Respondent for the purposes of Section 19 of the
Act was ultra vires the powers of the Minister.
67. Issues
concerning the constitutionality of this section were also raised in the High
Court and the learned trial Judge, in accordance with established practice,
found it unnecessary to consider this issue having regard to his determination,
that, as a matter of law, the appointment in question was ultra vires the
powers of the Minister under the Act. Accordingly, there is no issue
concerning the constitutionality of the section before this Court.
68. While
I propose to refer to certain essential facts of the case, I adopt the summary
of them and of the submissions of the parties which the Chief Justice has set
out in his judgment.
69. The
provisions of the 1990 Act which are material to the issues in this case are
set out hereunder: -
70. It
is the decision of the Minister on the 22nd July, 1998 to appoint an authorised
offer pursuant to Section 19 of the 1990 Act that is in issue in these
proceedings. On that date the Minister wrote to the Third Named
Applicant/Respondent in the following terms: -
72. A
warrant in the same terms appointing Mr Maloney as an authorised officer in
respect of Dunnes Stores (Ilac Centre) Ltd was issued by the Minister on the
same date, 22nd July, 1998.
73. On
4th August, 1998, Dunnes sought and were granted leave by the High Court to
apply by way of judicial review for Orders of Certiorari quashing the decisions
of the Minister to appoint Mr Maloney as an authorised officer in respect of
the said companies. Leave was granted on two principal grounds. Firstly, the
failure of the Minister to give any adequate reason for the purported
appointment of the authorised officer and secondly, an alleged conflict of
interest which vitiated the appointment of Mr Maloney as the authorised officer.
74. On
10th August, 1998, Mr Maloney resigned as the authorised officer and was
replaced by the First Named Respondent in these proceedings, Mr Gerard Ryan.
Since then the alleged conflict of interest ceased to be an issue between the
parties.
76. Laffoy,
J. and the learned High Court held that the exercise by the Minister of her
powers pursuant to Section 19 of the Act could be the subject of judicial
review proceedings (
Dunnes
Stores Ireland Company -v- Maloney
[1999] 3 IR 542
).
In her judgement Laffoy, J. also held that the principles laid down in
East
Donegal Co-operative -v- Attorney General
[1970] IR 317
and
The
State (Lynch) -v- Cooney
[1992] IR 337
applied to the exercise of powers by the Minister pursuant to Section 19 of the
1990 Act.
77. It
is well established that where a Minister is given a statutory power which may
be invoked by him or her in the due exercise of a discretion conferred by that
statute, such a discretion cannot be exercised arbitrarily or contrary to the
principles of constitutional justice. In
East
Donegal Co-operative -v- Attorney General
[1970] IR 317
at
343
78. Walsh
J. held, when considering the powers accorded to a Minister under the Livestock
Marts Act 1967, held,
“all
the powers granted to the Minister by s.3 which are prefaced or followed by the
words “at his discretion” or
“
as
he shall think proper” or “if he so thinks fit” are powers
which may be exercised only within the boundaries of the stated objects of the
Act; They are powers which cast upon the Minister the duty of acting fairly
and judicially in accordance with the principles of constitutional justice, and
they do not give him an absolute or unqualified or an arbitrary power to grant
or refuse at his own will
”.
While the nature of the power granted to the Minister under that Act was
different and not purely investigative as in the case of Section 19 of the Act
in issue here, the principle is the same. In
The
State (Lynch) -v- Cooney
[1982] IR 337 at 380
,
which considered the exercise of the powers of a Minister pursuant to Section
31 subsection 1 of the Broadcasting Authority Act 1960
79. In
the light of those principles Laffoy, J. held that in order to ensure that
parties in the position of the Applicants would have an effective recourse to
judicial review the principles of constitutional justice required that the
Minister should give reasons for her decision.
81. In
the context of these principles the requirement in Section 19 (2) that the
Minister be “
of
the opinion that there are circumstances suggesting that
”
one of the reasons enumerated at (a) to (h) of the subsection exist means no
more than that she must have reasonable grounds for her opinion. It is
exclusively a matter for the Minister to form the opinion. It is necessarily a
subjective one.
82. In
the light of the foregoing considerations it seems to me that in exercising her
powers under Section 19, the Minister, without intending to be exhaustive as to
all the elements which may be taken into account, must do so, so that:
83. Following
upon the decision of Laffoy, J. the reasons given by the Minister for the
appointment of an authorised officer under this section in respect of the First
Named Applicant Company were as follows: -
84. The
reasons given by the Minister for the appointment of an authorised officer in
respect of Dunnes Stores (Ilac Centre) Ltd were confined to Section 19(2)(a),
(2)(b)(ii) and (2)(f). Determination of the validity of the exercise of the
Ministers powers in relation to Dunnes Stores Ireland Company will govern the
issues which arise in respect of Dunnes Stores (Illac Centre) Ltd.
85. Dunnes
firstly take issue with the Minister’s decision based on Section 19(2)(a)
primarily on the grounds that a general concern about corporate governance is
not a ground for appointing an authorised officer or an inspector. It was
pointed out that the Minister had refused to define what she meant by corporate
governance, which was too vague a term to be relied upon.
86. It
was further submitted on behalf of the Applicant Respondent’s that
“corporate governance” embraces a range of features of the system
by which Companies are directed and controlled including the contractual duties
owed by the Directors and/or the company to its member or shareholders pursuant
to the Memorandum and Articles of Association; the common law duty owed by
Directors to their shareholders to exercise their functions with reasonable
care and skill; the fiduciary duty owed by the Directors to their members and
shareholders generally. It was submitted that these features are over and
above the duty to act in compliance with the Companies Act. Accordingly the
Minister, it was submitted, could not ground an appointment under Section 19
upon general concerns as to the standards of corporate governance. It was
further submitted that rather than having a general responsibility for
corporate governance, the Minister’s responsibility, for the purposes of
Section 19 was confined to securing compliance with the Companies Acts and not
with any perceived “best practice” criteria.
87. In
short, the Ministers responsibility under the Act was considerably narrower
than a concern for corporate governance which could not constitute a ground
within the meaning of Section 19(2)(a) for the appointment of an authorised
officer.
88. It
was also submitted that all the circumstances relied upon by the Minister as
giving rise to concerns about standards of governance relate to matters
disclosed in the ‘McCracken’ and ‘Buchanan’ reports.
These reports had been available to the Minister for a considerable period of
time. In the meantime the Applicant/Respondents had rectified the abuses
referred in those reports. It had not been shown that the appointment of an
authorised officer was “necessary” within the meaning of Section
19(2)(a).
89. The
condition identified in paragraph (a) of subsection 2 of section 19 differs
from the conditions referred to in any of the other subparagraphs of that
subsection. Paragraph (a) does not refer to any suspected wrongdoing, whether
criminal or civil, but to the necessity to examine the books and documents of
the body with a view to determining whether an inspector should be appointed to
conduct an investigation of the body under the Companies Act 1963-1990.
90. The
reasons given by the Minister for the exercise of her power under paragraph (a)
ought to be considered together. I do not think it can be accurately said that
the Minister relied simply on a general concern for breaches of standards of
corporate governance.
91. As
has been seen the reasons which the Minister has given for relying on that
provision refer to substantial breaches of standards of corporate governance by
reference to specific circumstances arising out of findings made by McCracken,
J. and Buchanan, J. in the inquiries conducted by them. Those specific
circumstances include the making of substantial payments in a manner so as to
assist a third party to evade income tax liability, the disbursement of various
substantial funds of the company by a director of the company to the benefit of
Third Parties, most of whom could not be identified, with no evidence of any
benefit having been obtained by the Dunnes Stores Group and the failure of the
company to keep proper books of accounts which made it impossible for most of
the beneficiaries of the funds dispersed to be traced. Those matters are
referred to in the reasons given by the Minister for relying on Section
19(2)(a) by reference to the circumstances which are outlined in relation to
the other paragraphs of Section 19(2) referred to in the schedule of reasons.
92. In
my view the nature of the power conferred upon the Minister by subsection 2(a)
of Section 19 is deliberately expressed in wide and general terms, relating as
it does to a form of preliminary inquiry which would enable the Minister to
best determine whether there are sufficient grounds for the appointment of an
Inspector to conduct an investigation of the company in question. This
contrasts to the very specific occasions for such intervention by the Minister
instanced in Subsections 2(b) to (h).
93. It
seems to me that the phrase “standards of corporate governance” in
its ordinary and natural meaning refers to the standards according to which the
affairs and business of the company are conducted by reference to the
obligations and standards imposed upon them by law as well as the Memorandum
and Articles of Association. (‘
governance:
the action or manner of governing: conduct of business behaviour
.’
New Shorter Oxford Dictionary).
94. The
very nature of public regulation of Companies, such as that found in the
Companies Acts (as well as other legislation) is to ensure and reinforce
certain standards of governance of corporate bodies. As a matter of policy
companies may look to generally accepted “best practice” criteria
in the conduct of their affairs.
95. The
O.E.C.D. Principles of Corporate Governance (SG-CG (99) 5) acknowledges in its
preamble that “
the
Corporate Governance framework also depends on legal, regulatory, and
institutional environments
.”
The World Bank report on Corporate Governance (published September 1999)
acknowledges that “
in
its
narrowest
sense
,
(emphasis
added)
corporate governance can be viewed as a set of arrangements internal to the
corporation that define the relationships between managers and shareholders
.”
but even, “
these
arrangements may be embedded in Company Law, Securities Law, listing
requirements, and the like ...”
That report also acknowledged that external rules have a direct effect on
corporate governance including
“...
the legal machinery for enforcing shareholders rights, systems for accounting
and auditing, a well regulated financial system, ...”
96. In
any case, apart from the foregoing citations, any ordinary and reasonable
interpretation of the notion of standards of corporate governance relates to
the manner in which a corporate body’s officers govern the corporation
and must in my view include compliance by companies and directors with any
regulatory regime, such as the Companies Acts, governing the conduct of their
affairs.
97. I
think it can be said that corporate governance has an internal and external
dimension. It is only in its narrowest sense that corporate governance can be
viewed as a set of arrangements internal to the corporation that define
relationships between managers and shareholders. Such internal arrangements
may, as was submitted, be governed by the Memorandum and Articles of
Association and companies may choose to follow certain “best
practice” criteria. The error, as I see it, in the submissions of the
Applicants/Respondents is to confine their perception of corporate governance
to such an internal dimension. The external dimension comprises those
standards or obligations laid down by external sources such as statutes or
statutory regulations.
98. While
the Companies Acts generally include provisions relating to the incorporation,
registration and structure of companies as well as such matters as duties of
directors towards their members, they also govern fundamental aspects of the
relationship between companies and the rest of society. The advantages of
trading or conducting business through a corporate entity, such as a company
with limited liability, are self-evident. Companies have a legal personality
separate and distinct from its individual members. Many aspects of how they
conduct their affairs as distinct entities are regulated by law in the public
interest. The Companies Acts are the primary source of that regulatory regime
even though there are other statutes which may regulate how a company or its
directors conduct its affairs such as the Competition Acts, certain provisions
of the Finance Acts or the Central Bank Acts. Statutory measures specifically
directed at companies, in particular the Companies Acts, define,
inter
alia
,
obligations specific to companies and their directors with which they are bound
to comply in the public interest. They set standards for corporate governance.
99. It
is not in issue that the Minister has a role under the Companies Acts in
supervising compliance by companies with such statutory provisions governing,
inter alia, the conduct of their affairs. Summary proceeding in relation to an
offence under the Acts may be prosecuted by the Minister. As regards the
Companies Acts, 1990, the Minister may apply to the court, pursuant to section
8, for the appointment of an inspector to investigate the affairs of a company
and to report thereon. She may appoint an inspector to investigate and report
on the membership or ownership of a company pursuant to section 14 of that
Act. In addition to her powers under Section 19, the focal point of these
proceedings, the Minister also has certain powers to investigate share dealings
of a company pursuant to Section 66.
100. Thus
the Oireachtas has conferred on the Minister, as the member of Government
responsible for the Department of Enterprise, Trade and Employment, significant
powers to ensure,
inter
alia
,
that companies who have availed of the right to incorporate and register under
the Acts and the advantages which such incorporation confers, do not abuse
those advantages to the detriment of their shareholders, creditors and, in
particular, the public interest. I do not think the statutory duties and
obligation imposed on companies and directors can be viewed simply as an end in
themselves for their benefit since those duties have a function in preventing
abuses of their corporate status which may lead to consequences which are not
just breaches of the Companies Acts per se, but may have other far reaching
consequences of public interest. Therefore, I do not think the concerns of the
minister in exercising her supervisory role pursuant to the Acts can be said to
be limited to simply whether a particular company has breached a particular
provision of the Companies Acts at a particular point in time. The Minister
must also be concerned with the damage which such breaches have on public
confidence in how companies conduct their affairs particularly where such
breaches may be extensive and have a potential consequence of undermining
confidence in corporate status and its governance.
101. In
this sense one of the purposes of the Companies Acts is to confer on the
minister a responsibility to be concerned with and oversee the standards of
corporate governance in companies as laid down or reinforced by those Acts.
102. Accordingly,
I have come to the conclusion that breaches of standards of corporate
governance as laid down or reinforced by the Acts may be taken into account by
the Minister when considering whether to exercise her powers under Section
19(2)(a). An expression of general concern with breaches of such standards
would not constitute a sufficient statement of her reasons for exercising her
power under that paragraph. As I have already pointed out the Minister relates
her concern to specific circumstances of abuse and misfeasance disclosed by the
reports of McCracken, J. and Buchanan, J. The reasons given are sufficient to
disclose a reasonable and rational basis for the Minister’s decision
pursuant to paragraph (a)
103. One
cannot loose sight of the fact that the whole purpose and object of paragraph
(a) is to enable the Minister to decide whether she has sufficient grounds to
proceed with an application for the appointment of an Inspector pursuant to
Section 8(1), (a), (b) or (c) of the Act. The abuses disclosed by the two
reports and relied upon by the Minister are clearly relevant to the grounds
upon which a Court might be asked to make an appointment pursuant to Section
8(1).
105. Much
argument was directed to the use of the word “necessary” in
subparagraph (a). It was contended on behalf of Dunnes that it was not
“necessary” to examine any of the books or documents of Dunnes in
the circumstances which exist in the present case. Clearly paragraph (a)
anticipates an application by the Minister under
s.8
of the 1990 Act for the appointment by the Court of an inspector in the
exercise of the discretion which the Court would possess in the event of the
Court being satisfied as to the existence of any of the circumstances
identified in paragraphs (a) - (c) of subsection 1 of section 8 aforesaid. That
being the case the word “necessary” clearly relates to the
requirement that the Minister should satisfy herself that appropriate
circumstances exist in which to make such an application and the Court being
provided with appropriate information to prove, first, compliance with the
statutory conditions and, secondly, adequate information on which to base the
exercise of the discretion conferred upon it in relation to such an
appointment. The word “necessary” could not be read as an absolute
condition precedent to the making of an application to the Court for the
appointment of an inspector, but the practical necessity of obtaining
sufficient information to justify the decisions which would be involved in
making an application to the Court which could have damaging effects for the
company in respect of which the application was made.
Where,
as in the present case, it is established that serious abuses took place in the
past I can readily see the necessity of examining certain books and records to
ensure that the position has been fully rectified and not repeated and that
there are reasonable grounds for assuming that there would be no further
recurrence.
106. Having
regard to the nature and extent of the abuses relied upon by the Minister in
the reasons which she gave, it has not been established that the appointment of
the authorised officer on Section 19(2)(a) was either irrational or
disproportionate.
107. Having
regard also to my earlier conclusions, I am satisfied that the Minister’s
decision, so far as Section 19(2)(a) is concerned, was an exercise of her
powers for purposes contemplated by the Companies Acts and within the terms of
the section.
109. As
regards the Minister’s reliance on other paragraphs and subparagraphs of
Section 19(2) I agree with the judgement of the Chief Justice and would allow
the appeal also in respect of the appointments made by the Minister pursuant to
Section 19(2)(d).
110. In
the circumstances this matter must be remitted to the High Court so that the
issue as to the constitutionality of the relevant statutory provisions should
be determined. This will unavoidably delay a final determination of the issues
between the parties in these proceedings. The learned High Court Judge
properly exercised his discretion not to deal with this issue for the reasons
stated at the outset of this judgement. I do not propose to consider in this
case the circumstances in which the High Court, as opposed the Supreme Court,
might in my view, consider an issue concerning the constitutionality of an Act
even where the proceedings are also determined in the High Court on another
legal basis. I do however think it appropriate to recall that the Committee on
Court Practice and Procedure in its 11th Interim Report published in 1970 made
the following recommendation:-
111. Again,
I do not wish to enter upon the merits of the entire ambit of this
recommendation but it does seem to me that where a net constitutional issue
concerning the validity of an Act or part of an Act of the Oireachtas arises in
proceedings for the resolution of which no decision on any disputed question of
fact is required, there is a great deal of merit in conferring on this Court,
at least with the consent of the parties, the power to determine that issue in
circumstances such as have arisen in this case rather than remitting it again
to the High Court when the common experience is that such issues are almost
invariably further appealed to this Court for final determination.
112. Pursuant
to the provisions of the Section 19(2)(a) of the Companies Act, 1990 directions
may be given by the Minister if she is of the opinion that there are
circumstances suggesting that it is necessary to examine the books and
documents of the “body”, as defined by Section 19(1) of the Act
with the view to determining whether an inspector should be appointed to
conduct an investigation of the body under Companies Acts. The bodies in
question in this instance are Dunnes Stores Ireland Company and Dunnes Stores
(Ilac Centre) Limited. The appointment of an inspector refers to the power of
the court to appoint one or more competent inspectors to investigate the
affairs of a company and to report thereon, on the application the Minister
pursuant to Section 8 of the Act.
113. The
vesting of such a power in the Minister is in the interest of saving court
time, expense and probably unwelcome publicity for the body or bodies in
question.
114. In
my judgment, to avail of this preliminary screening process all that is
requisite is that the Minister should be of the opinion that there are
circumstances suggesting that an application to the Court under Section 8(1)
might be necessary and with this in mind that a review of the relevant books or
documents or the body or bodies in question was appropriate before a final
decision to proceed was made.
115. It
is important not to overlook that the opinion to be formed is that of the
Minister alone: it is not the opinion of the Court or an opinion based on some
other objective standard. The basis for this opinion is no more than that
there are, “circumstances” which act upon the mind of the Minister.
What these “circumstances” are, is not defined in the Companies
legislation and in my judgment it is not for the Court to say what they might
be, but I venture to suggest that they at least should be identifiable matters
of substance.
116. The
subsection merely provides that these, “circumstances” should
suggest to the Minister that the particular course of action should be
considered. Once again the test is entirely subjective, and in my judgment
involves no more than that a positive indication should be presented to the
mind of the Minister that it is necessary to examine the books or documents of
the body or bodies with a view to making a determination whether or not to
apply to the Court under Section 8(1). There is no suggestion of legal or
civil standards of proof being requisite.
117. In
my judgment, “necessary” is not used in any extreme or compelling
sense in this subsection. In my judgment it has the meaning of,
“reasonably required”, in contrast to merely optional. Again, it
is important to emphasise that the question of whether it is or is not
reasonably required is not a matter of objective proof, or an issue to be
decided by the Court. The determination is that of the Minister alone and that
decision may not be usurped by the court and may only be set aside on clear
proof that it flies in the face of fundamental reason and common sense.
118. Incorporation
under the Companies Acts involves accepting the overseeing power of the
Minister. Persons who bind themselves together to constitute the legal entity
known as the “Company” cannot choose to enjoy the manifold
privileges and benefits of incorporation while rejecting the less convenient
aspects, such as the supervisory role of the Minister. It is for the more the
effective discharge of this function that the Oireachtas saw fit to confer on
the Minister the right to examine the books or documents of the bodies in the
circumstance specified in Section 19(2)(a) to 19(2)(h). In my judgment the
nature of the power conferred upon the Minister by Section 19(2)(a) is
intentionally expressed in wide and general terms relating as it does to a form
of preliminary enquiry, in contrast to the very specific occasions for such
intervention by the Minister instanced in subsections 19(2)(b) to 19(2)(h).
119. In
my judgment it is not sufficient for the Minister to cite, “a general
concern about standards of corporate governance”, without more, as a
basis for giving the direction under Section 19(2)(a).
120. I
consider that Section 19(2)(a) cannot be construed in isolation from Section
8(1), and the circumstances suggesting to the Minister the necessity to examine
the books and documents of the body or bodies must also suggest to her that an
application to Court under Section 8(1) is reasonably required.
121. A
departure from the, “standards of corporate governance”, so far as
this phrase is capable of a sufficiently certain definition, is not as such a
ground upon which the Court may appoint an inspector under Section 8(1).
122. In
my view, if the Minister has concerns about the proper management and control
of a body or bodies, the matters giving rise to that concern must be clearly
identified and must be such as suggests the presence of fraud,
misfeasance,
misconduct or unlawfulness of the type indicated in Section 8(1).
123. In
the present case, having regard to this view of its meaning extent and purpose,
I believe that the Minister was entitled to give a direction under Section
19(2)(a).
124. In
the Schedule exhibited at “A” in the affidavit of Paul Appleby
sworn on the 27th of November, 1998, under the heading “Section
19(2)(a)”, the first reason advanced for the decision of the Minister to
give the direction refers to, “the circumstances outlined under the
following headings”. This reference is to specific findings of the
McCracken
and Buchanan Inquiries
set
out in the statement of the other reasons.
126. In
my judgment these reasons are cumulative and severable. Even though the
Minister could not rely upon unspecified concerns about the standards of
corporate governance, she was entitled to rely upon the identified findings of
the
McCracken
and Buchanan Inquiries
without
more, for the purpose of giving the direction under Section 19(2)(a).
127. I
also agree with the decision of the Chief Justice, for the reasons set out by
him, that the Minister was entitled under Section 19(2)(d) to give the
direction in this case.