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Cite as: [2005] IEHC 119

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Neutral Citation No: [2005] IEHC 119

THE HIGH COURT

JUDICIAL REVIEW

2005/374 JR

GAMA ENDUSTRI TESISLERI

IMALAT MONTAJ A.S.

APPLICANT

v

THE MINISTER FOR ENTERPRISE TRADE

& EMPLOYMENT, AND EDWARD NOLAN

RESPONDENTS

APPROVED JUDGMENT DELIVERED BY MR. JUSTICE KELLY ON FRIDAY, 22ND APRIL 2005

MR. JUSTICE KELLY DELIVERED JUDGMENT, AS FOLLOWS, ON FRIDAY, 22ND APRIL 2005

There are two Gama companies before the Court. One, Gama Endustri Tesisleri Imalat Montaj, I will refer to as the 'Turkish Company'. The other Gama Ireland, I will refer to as the 'Irish Company'. Both companies were given leave to seek, by way of Judicial Review in separate proceedings, in effect, the same substantive reliefs. They both seek prohibition against publication of a report, if it has not already been published by the time this case comes to trial. They also seek certiorari to quash that report regardless of its state of publication.

The only order sought at present is an interlocutory injunction restraining the First Named Respondent, the Minister for Enterprise, Trade and Employment and the Second Named Respondent, Mr. Edward Nolan, who is the Head of the Labour Inspectorate at that department from publishing the report in question, both generally and to eleven named entities to whom it is intended to send it. These entities include The Garda Fraud Squad, The Competition Authority, the Director of Corporate Enforcement, The Garda National Immigration Bureau and The Revenue Commissioners.

The background to the case can be stated shortly as follows. Although they are separate legal entities and are represented separately, there is a relationship between the Turkish and the Irish companies.

The Turkish company has no place of business in this country but it says that it employs 1,350 persons in Ireland out of a total work force of 11,000 people. It does so by "seconding" them, as it describes it, on foot of what is called a "Consultancy Agreement" dated 1^st November 2001.

The Irish company is registered here. It has carried out major public works contracts in this State. In the calendar year ended 31st December 2003, the Irish company and it subsidiaries executed works to a value in excess of €89m in Ireland.

On 18^th February 2005, Deputy Joe Higgins made certain allegations in the Dáil. He said:

"There is a major foreign based multinational construction company employing 10,000 people, 2000 approximately in this State which has secured massive local authority and State contracts here. This company imports workers from its home base who do not speak English, controls their passports and work permits, accommodates them in company barracks, demands an extent of hours worked that can only be called grotesque and, incredibly, pays unskilled construction workers between €2 and €3 per hour basic pay and skilled workers somewhere over €3 per hour. In short, this is a modern version of bonded labour. The instigator is the Turkish company."

On that day and in the light of those allegations, the Minister directed the Labour Inspectorate of his department to investigate the allegations as a matter of priority. That was done. Much time and effort was expended on it. It has resulted in the preparation of a substantial report in a very short time. The report runs to some 40 pages of closely typed material, exclusive of ten appendices. It is this report which has given rise to these proceedings.

It is not desirable that I should, on an interlocutory application, refer to the reports' contents, still less express any view on them. It is, however, appropriate to mention that at the outset there were expressions of cooperation forthcoming to the Inspectorate from the Irish company. It is also noteworthy that on 3rd March 2005, the Irish company made admissions as follows. I quote now from a letter which is exhibited in the affidavits, a letter coming from Mr. Karaalioglu. The following admissions were made:

"There have been errors in calculating the payroll. These errors have been rectified with a 5.5% additional payment. I attach copy letters from the Head Office.

The company is not keeping working time records in accordance with the Regulations. I attach a copy letter from our solicitors of 2nd August 2002, which did advise me of the formal requirements. I would like to discuss your requirements to rectify this matter going forward.

We have found in the internal investigation that pay slips were only handed out in Turkey where the employees have their formal employment contract. Pay slips for the February payroll onwards will also be handed to employees in Ireland in line with advice from SIPTU last week and we are going to insert additional information."

By the next day the 4th March 2005, the 5.5% error had increased to 8%. That is clear from a statement issued by Murray Consultants on behalf of Gama Ireland, dated 4th March 2005. It begins by saying:

"An internal review of payroll procedures at Gama Construction has found errors in the calculation of payments to expatriate employees in Ireland. On average this has resulted

in employees receiving 8% less than their entitlement over a limited period of time.

It was not until Mr. Nolan, the head of the Labour Inspectorate, received a letter of 9th March 2005, that he was informed that the Irish company was not the direct employer of any Turkish workers. Up until then, no issue had been made of distinction between the Irish and the Turkish companies. This, late in the day, disclosure is but one of a number of unsatisfactory aspects of the Applicant's behaviour.

On 16th March the Inspectorate, in a letter of that date, pointed out that the inquiry was being carried out with full statutory authority and that at the direction of the Minister, it was to be completed within a short time. The draft report which came at the end of the investigation was provided to the companies and responses were required of them quickly. Time was extended for those responses. The sending of the draft report was done on the advice of the Attorney General.

On 31st March 2005, a long letter was sent by the Turkish company to the Inspectorate. It asserted that the investigation upon which the report was based was legally flawed and that, therefore, the report could not be concluded or published or given to any third parties.

The contents of that 12 page letter are succinctly summarised at paragraph 44 of the affidavit sworn by Mr. Nolan in the Turkish company's proceedings. That reads as follows.

"In a 12 page letter dated 31st March 2005, the Applicant set out the reasons why it had come to the conclusion that the investigation upon which the draft report was based was carried out in a manner outside the powers of the Minister and the Inspectorate and could not be continued, that no report based on my investigation could lawfully be concluded or published or furnished to other parties, and that the draft report is flawed to such an extent that it may not lawfully be published. The Applicant stated, inter alia, that it was at a loss to understand the statutory basis that underpins the draft report, that the draft report goes outside the matters I was empowered to investigate, that the language and tenor of the draft report is such that the true motivation behind and legal basis of much of it, if not all of the draft was questionable, and that the target of the draft report is the employer of the Turkish workers currently employed at Gama Ireland protects in the State.

In the conclusion of the letter, the Applicant stated that the purpose of the letter was to repond to the draft report within the time limit allowed by me and that their response was without prejudice to any further comments which they may wish to make at any appropriate time if they considered it necessary to do so. The Applicant asserted that the investigation I conducted was outside my statutory powers and was conducted in an unlawful manner, that the draft report is incomplete and does not meet acceptable standards, and as a result of the

foregoing, the draft report is unlawful and may not be published or disclosed in any other way.

The Applicant stated that it required my immediate undertakings in the terms set out therein and that in default of those undertakings, it would instruct its Irish solicitors to apply

immediately to the Irish Courts for an order restraining publication of the draft report and restraining the continuation of my investigation as currently constituted."

Leave was given to begin Judicial Review proceedings to the Turkish company on 1st April of this year. Similar leave was leave was given to the Irish company on 12th April. An injunction to restrain the release of the report was granted in the Turkish proceedings on the same day, 1st April, as it got leave and that restraint is now sought to be continued until the trial of these proceedings.

The task which I am undertaking today is radically different from that which will confront the Trial Judge. He/she will have to make, subject only to the right of appeal, final and binding determinations as to the correctness or otherwise of the submissions made by the respective sides. The Trial Judge will also, insofar as any of the relief may be discretionary, be entitled to adjudicate on whether or not the behaviour of the Applicants is such as to debar them from substantive relief. One side will win and the other will lose. I am precluded from making any such determinations at this stage.

The approach which has to be taken by a court on an application of this sort is set forth in the speech of Lord Diplock in the decision in American Cyanamid v Ethicon [1975] 1 A.E.R. at page 504. The relevant passage begins at page 510. Since it has a bearing on the whole approach to an application of this sort and has particular significance in respect of some of the matters that I have to deal with, I propose to read this passage in full. Lord Diplock was dealing with a situation where argument had been made that before an injunction could be obtained, it was necessary to show either a strong prima facie case or a probability of success at trial. He said the following:

"Your Lordships should, in my view, take this opportunity of declaring that there is no such rule. The use of such expressions as a 'probability', a 'prima facie case' or a 'strong prima

facie case' in the context of the exercise of a discretionary power to grant an interlocutory injunction leads to confusion as to the object sought to be achieved by this form of temporary

relief. The Court, no doubt, must be satisfied that the claim is not frivolous or vexatious. In other words, that there is a serious question to be tried.

It is no part of the Court's function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend, nor to decide difficult questions of law which call for detailed argument and mature considerations. These are matters to be dealt with at the trial.

One of the reasons for the introduction Of the practice of requiring an undertaking as to damages on the grant of an interlocutory injunction was that it aided the Court in doing that which

was its great object, namely abstaining from expressing any opinion upon the merits of the case until the hearing. So unless the material available to the Court at the hearing of the application for an interlocutory injunction fails to disclose that the Plaintiff has any real prospect of succeeding in his claim for a permanent injunction at the trial, the Court should go on to consider whether the balance of convenience lies in favour of granting or refusing the interlocutory relief that is sought.

As to that, the governing principle is that the Court should first consider whether if the Plaintiff were to succeed at the trial in establishing his right to a permanent injunction, he

would be adequately compensated by an award of damages for the loss he would have sustained as a result of the Defendants continuing to do what was sought to be enjoined between the time of the application and the time of the trial. If damages in the measure recoverable at common law would be adequate remedy and the Defendant would be in a financial position to pay them, no interlocutory injunction should normally be granted, however strong the Plaintiff's claim appeared to be at that stage. If, on the other hand, damages would not provide an adequate remedy for the Plaintiff in the event of succeeding at the trial, the Court should then consider whether on the contrary hypothesis that the Defendant were to succeed at the trial in a establishing his right to do that which was sought to be enjoined, he would be adequately compensated under the Plaintiff's undertaking as to damages for the loss he would have sustained by being prevented from doing so between the time of the application and the time of the trial. If damages in the measure recoverable under such an undertaking would be an adequate remedy and the Plaintiff would be in a financial position to pay them, then there would be no reason on this ground to refuse an interlocutory injunction. It is where there is doubt as to the adequacy of the respective remedies and damages available to either party or to both that the question of balance of convenience arises. It would be unwise to attempt even to list all the various matters which may need to be taken into consideration in deciding where the balance lies, let alone to suggest the relative weight to be attached to them. This will vary from case to case.

Where other factors appear to be evenly balanced, it is a counsel of prudence to take such measures as are calculated to preserve the status quo. If the Defendant is enjoined temporarily from doing something that he has not done before, the only effect of the interlocutory injunction in the event of his succeeding at the trial is to postpone the date at which he is able to embark on a course of action which he has not previously found it necessary to undertake, whereas to interrupt him in the conduct of an established enterprise would cause much greater inconvenience to him since he would have to start again to establish it in the event of his succeeding at the trial."

I therefore turn to the question of whether a serious issue or serious issues have been demonstrated by the Applicants in these proceedings.

It is alleged by them that the report in question is not justified at law under a number of different headings.

Insofar as the Applicants contend that the Minister could not direct the carrying out of an investigation, I am satisfied that they have not raised a serious issue for trial. The Minister, on receipt of information of the type which was dealt with by Deputy Higgins, must be entitled to direct the Inspectorate of his department to investigate that matter and to report to him.

Insofar as they contend that the Inspectorate was not entitled to use its statutory powers granted under the employment protection legislation in furtherance of an investigation simpliciter directed by the Minister, I am of the opinion that no serious issue has been made out under that heading either.

The real issue is whether there was a lawful exercise Of its statutory authority by the Inspectorate for the preparation of a report which was to be published to the world at large. Publication is not, it would appear, authorised or required by statute. The real issue is whether it can be done by ministerial fiat. In my opinion, a serious issue for trial has been made out in respect of this question. The question is was the investigation and the report ultra vires because it was and is intended for widespread publication, such publication not being contemplated or authorised by any of the relevant statutes.

That is a serious issue for trial in the present case. I should say that had the report been intended solely for the purposes of either the enforcement of the employee protection legislation or the provision of information for the Minister whose department has responsibility in respect of matters of this type, the position would be different. Indeed, had the Minister wished to circulate the report to other enforcement agencies, such as the five that I have already mentioned, then, likewise, I am of the opinion that the Applicants would have no stateable case to seek the reliefs which they seek under that particular heading.

In my view, the Minister, on receipt of information on foot of an investigation of type in suit, is perfectly entitled to send that to other enforcement agencies in the State. I come to that conclusion having regard to the views expressed by Mr. Justice O'Hanlon in the High Court and Mr. Justice McCarthy in the Supreme Court in the case of Desmond v. Glackin No. 2 [1993] 3 I.R. I quote in support of that the following proposition from the judgment of Mr. Justice McCarthy at page 132. He said:

"I am satisfied that there is no principle of law, nor indeed is there any principle of common sense which would prohibit a Minister of State who properly has obtained from an agent

carrying out on his behalf a statutory power vested in him information which may be of assistance to another Minister of State in carrying out a statutory duty imposed on him, such as

the investigation of an inspector appointed under Section 14 of the Act of 1990 from assisting that investigation. I would affirm with approval the statement contained in the

judgment of Mr. Justice O'Hanlon in respect of this particular issue. The foundation of freedom in our society must surely have a sounder base than the possible concept of Government activity carried out of necessity in watertight compartments.

I am therefore satisfied that the learned Trial Judge was correct in rejecting the application for a declaration and hold that there was nothing illegal or improper in any way in the obtaining which was done with full disclosure by the Inspector through the Ministry for Inducstry & Commerce from the Minister for Finance Of the information supplied by the

Central Bank."

However, that is not the issue here. The issue here is the preparation of a report for publication to the world at large. Having held that there is at least one serious issue for trial, I need not consider in any detail, having regard to the urgency of the matter, the second legal issue which was raised. That was one which concerned the procedures followed. It is said on behalf of the Applicants that those procedures allegedly depart from procedures hitherto understood as applying before compulsory powers can be used to produce a report which may be damaging of reputation.

I then proceed to the next matter that I must consider, which is adequacy of damages. If the Applicants succeed on their attack on the report, Whether on the basis of lack of vires or inappropriate procedures having been followed, then The report will be quashed. That is so, of course, unless there is something in their behaviour which would disentitle them to any aspect of that relief which is discretionary.

If an injunction is not granted now, the report will be published in full to all the sundry. On the present state of the law, it appears that no damages would be available for such a publication in the absence of mala fides. (See my own judgment in Glencar v Mayo County Council as affirmed by the Supreme Court). The Applicants would, therefore, be without a remedy in damages for the publication of a report prepared without legal authority or in respect of which appropriate procedures had not been followed. Damages would, therefore, in my view, be inadequate because they would not be available at all. It seems to me that much is acknowledged by the observations made by Mr. Justice Fennelly in the Glencar case when he dealt with an ultra vires act of a public authority, and he said in the course of his judgment:

"A similarly positioned victim of an ultra vires act of a public authority by way of contrast, because he would not have been entitled to damages, has at his disposal the increasingly

powerful weapon of Judicial Review. Thus he may be able to secure, as in this case, an order annulling the offending act. In appropriate cases a court may be able to grant an

interlocutory injunction against its continued operation."

In the defamation proceedings the Court will not normally grant an interlocutory injunction to restrain publication of defamatory material where the publisher says he will justify it. That is known as the rule in Bonnard v Perryman, (see that decision and my own decision recently in Foley v Sunday Newspapers).

Insofar as it is said that there may be defamatory material here, there is no such plea of justification on the part of the Respondents. Rather, there is an assertion that the act of publication itself as distinct from the contents of the publication is justified. There is also at least a risk that if publication takes place here, it will take place on an occasion of either absolute or qualified privilege.

I have, therefore, come to the conclusion, using the words of Lord Diplock, that there is here doubt as to the adequacy of the remedy of damages to which the Plaintiff might be entitled in the event of the publication being permitted now and ultimately the report being quashed.

Those observations, however, are not dispositive of the application before me, because I now have to consider the balance of convenience. I am satisfied that the damage which would be suffered by the Applicants, if the report is published generally, could be extremely damaging to them. If publication is restrained for a short time, again to use the words of Lord Diplock, then the Respondents would be enjoined temporarily from doing something that they had not done before and the only effect of the injunction is to postpone the date at which they may be able to embark on the course of action in question. It seems to me that that would be the effect of any injunction which I might grant and I cannot perceive that there is any irreparable loss which would be suffered by the Defendants in the event of such an order being made.

There was another submission made to me and that was to the effect that the behaviour of the Applicants in the conduct of these proceedings was such as to disentitle them to equitable relief. Although there are disquieting elements concerning the behaviour of the Applicants, I am not satisfied that they have been guilty of such wrongdoing or non-disclosure in respect of the proceedings as to disentitle them to relief.

I am, therefore, going to grant a limited form of injunction, not the wide form of injunction sought, and I propose to grant it for the shortest possible time. I am quite satisfied that I ought not to grant any injunction which would restrain the sending of the report by the Minister to the five entities which I have already named. They are The Garda Fraud Squad, The Competition Authority, The Director of Corporate Enforcement, The Garda National Immigration Bureau and The Revenue Commissioners. I will place no obstruction or obstacle in the way of those authorities being apprised of the contents of the report. Neither will I place any fetter on any action which they may seek to take, civil or criminal, on foot of the report. Neither will I take any action which would in any way impede the Labour Inspectorate from taking any action either on foot of the admissions of wrongdoing made or other material contained in the report. I will, however, restrain the publication of the report to any other part or to the public at large until the trial of this action. I am satisfied that the matter is one which requires an urgent trial and I fix the trial to commence next Tuesday week. There will be that limited form of injunction until the trial of the action, which will commence on Tuesday week.

END OF JUDGMENT

Approved: Peter Kelly

18/4/05