Supreme Court of Ireland Decisions

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:-

4. The letter went on to state that the authorised officer was Mr. George Maloney, FCCA.

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:-

15. Under the heading “ s. 19(2)(b)(iii), s. 19(2)(d) (of the 1990 Act )”, the Schedule states:-

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.

21. Under the heading “ s .19(2)(f) ”, the Schedule finally states that:-

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 :-

25. In the course of the memorandum Mr. Appleby said:-

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: -

71. The warrant was signed by the Minister.

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.

75. The judicial review proceedings referred to above came on for hearing before

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.

80. I agree fully with the conclusions reached by Laffoy, J. in his regard.

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).

104. I have come to the conclusion, therefore, that the reasons stated by the Minister for

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.

108. Accordingly I would allow the appeal on this ground.

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.

125. This first reason then goes on to state that these circumstances:-

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.