National Irish Bank, Re (No.2) [1999] IEHC 134; [1999] 3 IR 190; [1999] 2 ILRM 443 (19th March, 1999)

JUDGMENT of Mr Justice Kelly delivered the 19th day of March 1999 . INTRODUCTION 1. National Irish Bank Limited (the bank) and National Irish Bank Financial Services Limited (the company) are both under investigation by Inspectors appointed by this Court pursuant to the provisions of Part 2 of the Companies Act, 1990 . They seek two orders which, if granted, will affect the conduct of those investigations. 2. The first order sought seeks to limit the Inspectors in their investigation of compliance by the bank with its obligations concerning Deposit Interest Retention Tax (DIRT). The second order seeks to compel the Inspectors to furnish to the bank and the company copies of all of the transcripts and supporting documentation relating to interviews carried out by the Inspectors with staff and customers of both entities. 3. In order to understand how these applications come to be made at this time it is necessary to set out the relevant background. BACKGROUND 4. A year ago the Minister for Enterprise, Trade and Employment applied to the this Court pursuant to Section 8 (1) of the Companies Act, 1990 for the appointment of joint inspectors to investigate and report on the affairs of the bank. 5. On the 30th March, 1998 I appointed the Honourable John Blayney, a retired judge of the Supreme Court, and Thomas Grace, FCA, as Inspectors over the bank. My order of that date directed them to investigate and report on the affairs of the bank relating to:- (i) The improper charging of interest to accounts of customers of the bank between 1988 and the 30th March, 1998 (ii) The improper charging of fees to accounts of customers of the bank between 1988 and the 30th March, 1998. (iii) The improper removal of funds from accounts of customers of the bank between 1988 and the 30th March, 1998. (iv) All steps and action taken by the bank, its directors and officers, servants or agents in relation to the charging of such fees or interest or the removal of any funds without the consent of the account holders and their actions arising from the issues when discovered. (v) The manner in which the books, records and accounts of the bank reflected the foregoing matters. (vi) The identity of the person or persons responsible for and aware of any of the practices referred to above. (vii) Whether other unlawful or improper practices existed in the bank which served to encourage the evasion of any revenue or other obligations on the part of the bank or third parties or otherwise. 6. That order was not objected to nor appealed by the bank. 7. On the 15th June, 1998 the same Minister obtained a similar order concerning the affairs of the company from the late Shanley J. The same Inspectors were appointed and on this occasion were directed to investigate and report on the affairs of the company relating to:- (a) The effecting of insurance policies through the company with clerical medical insurance Company Limited, Scottish Provident International Life Assurance Limited and Old Mutual International (Guernsey) Limited. (b) The role of the company, its officers, servants and employees in connection with the effecting of the said policies of insurance. (c) The purposes behind the execution of the aforesaid policies of insurance. (d) The knowledge of the management and board of directors of the company of the effecting of the said policies of insurance. (e) The identity of the person or persons responsible for or aware of the effecting of or purposes behind the said policies of insurance. 8. The application for this Order was opposed by the bank and the company which, through the bank's chief executive, described it as "ill-conceived". Nevertheless the Order, once made, was not the subject of an appeal. 9. On the 13th July, 1998 the late Shanley J. delivered judgment in respect of a trial of certain issues which arose in the investigation, one of which is relevant to the matters which I have to decide on this application. He was asked inter alia to make a determination that procedures outlined by the Inspectors as ones which they would follow in the conduct of their investigation and which were set forth in letters of the 4th June, 1998 were consistent with the requirements of natural and constitutional justice. 10. The letter of the 4th June, 1998 insofar as is relevant recites as follows:- " 2. Procedures to be followed . We have explained that we consider that the first phase of interviews with witnesses will be an information gathering exercise. These interviews will be conducted in private. A transcript of the witness's evidence will be available to the witness from the stenographers on payment of the cost of the additional copy. We have no objection to any witness being accompanied by a legal adviser at such interview but, with respect, we consider that it would be inappropriate certainly premature and probably impossible to treat such interviews as approximating to a trial with an entitlement to attend and cross-examine the evidence given by other witnesses. There can be no question of our indemnifying your clients or any of them in relation to costs whether legal or otherwise. Section 13 of the Companies Act, 1990 states that the expenses of and incidental to an investigation shall be defrayed by the Minister for Justice. We have no role to play in this regard and any question of costs which you wish to pursue must be addressed to the Minister. We do not propose to circulate lists of questions in advance of the taking of any evidence from witnesses. Given the nature of our work it would be impossible to predict with certainty what questions will or will not arise at any particular interview. If, however, the outcome of the first phase of interviews indicates that it is possible that adverse conclusions may be drawn in relation to certain individuals dependant in whole or in part on the testimony of others then it is our intention that a hearing will be held at which such issues can be addressed, and at which persons who may be at risk of an adverse finding will be entitled to attend to hear the evidence, cross-examine the witnesses and give evidence themselves. In the light of these procedures we consider it would be inappropriate and inconsistent with the statutory procedure to provide copies of the draft report to witnesses and invite comments on it." 11. Shanley J. commented upon this aspect of that letter as follows: "It is clear from this letter that the inspectors propose a two stage procedure in their examination; the first, an information gathering exercise; the second stage, arising only when the first stage indicates it is possible that adverse conclusions may be drawn in relation to certain individuals dependant in whole or in part on the testimony of others. At the latter stage such individuals at risk will be entitled to attend, hear the evidence, cross-examine the witnesses, and give evidence themselves". 12. In ruling upon the propriety of the course which the Inspectors indicated they would follow Shanley J. had the following to say:- "Objection is taken to the procedure (outlined in the letter) by the representative Respondent. While the Applicant suggested the first stage of the Inspectors' process is entirely investigative, the representative Respondent disagrees. He says it is accusatory. He points to the affidavit grounding the application to appoint the Inspectors. It is, he says, replete with accusations of criminal conduct; there are allegations, he says from anonymous sources of crimes committed at particular National Irish Bank branches including Carrick-on-Shannon at which he, Mr O'Reilly, was a manager for a particular period of time. He says that he now stands in the public domain accused of criminality and is therefore in no different a position to the position of Padraic Haughey himself when he stood before the public accounts committee of Dail Eireann accused of criminal conduct. It is submitted on behalf of Mr O'Reilly that he is entitled to the full panoply of "Haughey" rights; a copy of the evidence reflecting on his good name, the opportunity to cross-examine his accusers, the opportunity to give rebutting evidence and the entitlement to address the Inspector. He contends that having regard to such rights he is entitled to all and any material in the hands of the Inspectors which reflect on his good name and reputation and is further entitled to cross-examine his accusers before he himself is sworn and examined. I do not believe this submission to be well founded. The rights identified by the Supreme Court in the case of Re Haughey [1971] IR 217 were rights which the Courts believed should be afforded to a person who had been accused of conduct reflecting on his character and good name and where the accusations made were upon the hearsay evidence of a witness before the Public Accounts Committee of Dail Eireann. While it is undoubtedly the case that allegations of the commission of criminal offences have been made in the media against National Irish Bank and its officers, the case differs from the Haughey case where the accusations were made by evidence under oath from one Superintendent Fleming before the Public Accounts Committee. It was that evidence that the Supreme Court held Mr Haughey was entitled to have tested; in the present case, there is no evidence; there is documentation in the hands of Inspectors, but that documentation has not become and is not "evidence" in the sense understood by the Supreme Court in Re Haughey . Accordingly the Inspectors cannot be compelled at this point in time to produce any documents to the representative Respondents and, he in turn, is not entitled to any documents or the facility of cross-examining any person at this initial stage in the process. I am satisfied that there is no entitlement to invoke the panoply of rights identified by the Supreme Court at the information gathering stage of the Inspectors' work. The procedures identified by the Inspectors following the outcome of the first stage accord in my view with the requirements of fairness and justice and guarantee, where appropriate, the exercise of the rights identified in the Haughey case. I therefore determine that the procedures outlined by the Inspectors in their letters dated 4th June, 1998 .... are consistent with the requirements of natural and constitutional justice". 13. On the 16th December, 1998 the legislature passed into law the Comptroller and Auditor General and Committees of the Houses of the Oireachtas (Special Provisions) Act, 1998 (the Special Provisions Act). The long title of that Act makes it clear that the legislation is designed to " provide for the examination and investigation by the Comptroller and Auditor General of the assessment and collection by the Revenue Commissioners during such period as may be specified by Dáil Éireann by resolution of amounts representing income tax that were required by law to be deducted by certain financial institutions from interest payable by them on certain deposits of money with them and paid to the Collector-General, to amend the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act, 1997 and to provide for related matters". 14. On the following day the Dáil passed a resolution of the type envisaged in the Act. The resolution provides inter alia that the Dáil "having been apprised of prima facie evidence of a substantial risk to the revenues of the State by means of the interim reports of the Committee of Public Accounts on the Appropriation Accounts 1997 resolves that: (a) Under Section 21 of the Comptroller and Auditor General and Committees of the Houses of the Oireachtas (Special Provisions), Act, 1998 ('the Special Provisions Act') and in exercise of the powers conferred by that Act the Comptroller and Auditor General ('the Comptroller') be requested to: (i) Carry out such examinations and investigations as he considers appropriate of the affairs and the books of account and other records in any form and other documents in respect of the period 1 January, 1986 to 1 December, 1998 of financial institutions as defined in Section 1 of the Special Provisions Act, being institutions that were required by chapter IV of Part I of the Finance Act, 1986 and chapter 4 of Part 8 of the Taxes Consolidation Act, 1997 , to deduct amounts representing income tax from payments of amounts in respect of interest made by them during the period aforesaid on certain deposits of money with them and to pay the amounts representing income tax to the Collector-General and to make returns to the Collector-General of the amounts aforesaid of interest and the amounts aforesaid representing income tax" . 15. It is not necessary to recite in full the terms of the lengthy resolution save to point out that the Comptroller was required to ensure that any report furnished by him pursuant to the legislation would set out such facts and evidence as he deemed appropriate and would facilitate the efficient, effective and expeditious completion of the hearings by the Committee of Public Accounts. 16. On the same day the Inspectors delivered their second interim report to this Court. In the course of that report the Inspectors referred to their first interim report on the investigation of the affairs of the company. They record that in that report they stated that the work carried out by them up to August 1998 strongly suggested that the marketing and sale of insurance policies effected with Clerical Medical, Scottish Provident and Old Mutual Insurance Companies was carried out by the bank rather than by the company. Since August of 1998 they had interviewed 75 individuals who invested in insurance products under-written by those insurance companies. None of the persons interviewed made any reference to the company or appeared to be aware of its existence. They all gave evidence of having dealt with employees of the bank, principally bank managers and consultants from the financial advice and services division of the bank. The Inspectors indicated to the Court that it seemed to them that their investigation in relation to the effecting of the insurance policies could not be confined to their investigation of the affairs of the company. They said that they believed that it would have to be carried out as part of their investigation of the affairs of the bank pursuant to my order of 30th March, 1998. They drew attention to the final mandate given to them by that order which was to investigate "whether other unlawful or improper practices exist or existed in the bank from 1988 which served to encourage the evasion of any revenue or other obligations on the part of the bank or third parties or otherwise". They said that they were satisfied that the question which arose in relation to the effecting of the insurance policies required to be investigated in the context of the bank 17. Later in their report they set out evidence, which was given to them by persons who invested in one or other of the insurance policies, of the manner in which the policies were promoted and sold and as to a number of related matters. They then set out what they described as "aspects of the evidence which in our opinion are particularly relevant to our investigation". There is then set out a series of matters which had been dealt with in evidence given to them by the various interviewees. It is clear that a number of the interviewees in the course of evidence made statements concerning the activities of employees of the bank covering inter alia the opening and maintenance of bogus non-resident deposit accounts, the provision of fictitious addresses for the opening of such accounts and the facilitation of the opening of deposit accounts by Irish residents at branches of associated companies of the bank outside this State. 18. The final paragraph of the Inspectors' report is highly relevant to some of the issues that fall to be decided on this application. They said:- "In setting out the more salient details of evidence given to us, we wish to emphasise that we have not yet formed any concluded view on these matters and cannot do so until officials of the Bank have been given an opportunity of giving evidence to us. The only officials of the Bank from whom we have taken sworn evidence to date are one current member of staff and two people who have retired from the Bank.... .... Until we have had the opportunity of interviewing the relevant employees of the Bank, it is not possible even to commence the process of considering whether the evidence should be accepted or not. We considered it proper nonetheless that we should report to the Court now what we have done to date in the conduct of our investigations". THE DIRT INVESTIGATION 19. On the 23rd November 1998 the Inspectors wrote to the Secretary of the bank concerning the provision of DIRT Free Non-Resident Deposit Accounts which had been maintained by the bank over the period of their investigation. Eight questions were posed to the bank concerning inter alia the internal procedures operated by the bank to ensure compliance with its obligations as a deposit taker under the relevant legislation, the controls and review processes operated by the bank, any approach made by the bank to the tax authorities in relation to the bank's potential exposure to DIRT in respect of interest on possible bogus non-resident deposit accounts. The letter also asked about the level of compliance by the bank with the terms and conditions of any settlement or agreement reached by it with the tax authorities in relation to any alleged bogus non-resident deposit accounts held by it during the period covered by their investigation. Ultimately the bank provided answers to these questions but in the meantime on the 12th January of this year wrote to the Minister. In the letter to the Minister it pointed out that the Comptroller and Auditor General was carrying out an investigation into DIRT on an industry-wide basis and as part of that investigation had communicated with the bank. The letter went on to point out that the Inspectors were also investigating compliance by the bank with its DIRT obligations. The letter goes on:- "It would not have been the intention of the Government or the Dail that there would be duplication of investigation in the manner detailed. It seems to us that it is unnecessarily wasteful and time consuming, both for the authorities and for us, for the same ground to be covered both by the Inspectors and by the Comptroller and Auditor General when each has all necessary powers to conduct and complete a thorough investigation. Given the industry-wide scope of the Comptroller and Auditor General's enquiry, we believe that enquiry should take precedence over the specific investigation being conducted by the High Court Inspectors, to the extent of any overlap. The bank is considering applying to the Court for an Order removing this duplication by dispensing the Inspectors from their obligation to investigate the issues being addressed by the Comptroller and Auditor General. Whilst obviously this is a decision for the Court, we have no doubt that the Court would be influenced by your views, both as regulator of companies and also because the Inspectors' terms of reference were originally proposed by your Department". 20. It is clear that the Minister does not share the views expressed in this letter. Counsel appeared on her behalf on this application and opposed both the substance and the form of the order which is sought concerning DIRT compliance. THE ORDER SOUGHT IN THE DIRT ISSUE 21. In its original form the bank and the company sought an order "excluding any matters which are being investigated" by the Comptroller pursuant to the Special Provisions Act and the resolution passed by Dáil Éireann on the 17th December 1998 from the terms of the orders appointing the Inspectors to investigate the bank and the company. In the course of the hearing leave was given to amend and to re-amend this relief. The form of order which is now sought is "an order directing that the Inspectors should not engage in a DIRT compliance investigation of the bank which extends beyond effecting such investigation as they consider necessary to report upon any issues of unlawful or improper practices that exist or existed in the bank from 1988 to-date which served to encourage the evasion of any revenue or other obligations on the part of the bank or third parties or otherwise and which relate to the effecting or selling or marketing, in any capacity whatsoever, of insurance policies through the bank and/or the company" with Clerical Medical, Scottish Provident and Old Mutual Insurance Companies. 22. The purpose of this order is clearly to remove from the purview of the Inspectors questions concerning the banks compliance with its DIRT obligations save insofar as they relate to the effecting or selling or marketing of the insurance policies with the specified companies. If granted the effect of such an order would of course be to narrow the directions originally given to the Inspectors and the scope of their enquiries. I must now turn to the legal basis upon which the Applicants say they are entitled to such an order. THE LEGAL BASIS FOR THE APPLICATION 23. The principal theme which resonates throughout the Applicants' argument on this question is that there is here a "duplication of process" and that it is wrong that they should be the subject matter of contemporaneous investigations into the same matter. They support this basic contention by reliance upon a number of well-known legal principles such as the protection from double jeopardy, the doctrine of res judicata and argument based upon the wording of section 7 (4) of the Companies Act, 1990 . 24. I will consider each of these arguments in turn but before doing so it would be as well to set out in a short form the approach taken by the Minister and the Inspectors to the argument made by the Applicants and the invocation of the relevant legal principles in support thereof. THE MINISTER'S STANCE 25. The principal opposition on this aspect of the application came from the Minister. The Minister contends that the Applicants are proceeding on a fallacious basis, mistakenly seek to import legal doctrines from areas of law where they are well established into parts of the law where they have no place and in so doing are behaving in an inconsistent manner with the approach already taken by them. THE INSPECTORS' STANCE 26. The Inspectors, quite properly, took the view that this question was one primarily to be dealt with between the Applicants and the Minister but nonetheless put factual material before me which they felt might assist on certain practical aspects of the application and made legal argument insofar as they thought it might assist the Court. DUPLICATION OF PROCESS 27. It is accepted by all parties that there may well be an overlap concerning the factual matter on the topic of DIRT which is being examined by the Inspectors and by the Comptroller and Auditor General. However, can it be said that that fact gives rise to what the Applicants describe as a "duplication of process" ? 28. The investigation which is being conducted by the Inspectors is with a view to discovering whether there were any unlawful or improper practices extant at the bank which served to encourage the evasion of any revenue or other obligations on the part of the bank or third parties or otherwise. It seeks to elicit information concerning any wrongful acts on the part of the bank in the context of Part 2 of the Companies Act, 1990 . That part of the Act contains a series of mechanisms which provide for the investigation of entities which enjoy the privilege of incorporation to establish whether there exist improprieties in the conduct of their affairs. The investigation is conducted at all times under the supervision and at the direction of the Court . If the report of an investigator discloses wrongdoing the Court is, if satisfied that such is established, invested with very wide powers to deal with such wrongdoing pursuant to the provisions of Section 12 . Those powers include an order of the Court of its own motion for the winding-up of a company. In addition Section of the Act clearly envisages that civil proceedings may occur subsequent to an Inspector's report being made. In such case a special evidential status is given to such report since it is admissible in any civil proceedings as evidence of the facts set out therein without further proof unless the contrary is shown and is also admissible as evidence of the opinion of the Inspector in relation to any matter contained in the report. 29. The object of all of this is clearly to ensure that bodies corporate comply with their statutory obligations and do not engage in unlawful activities. 30. Inspectors appointed by the Court are given wide powers including powers to require production of books and documents and to examine interviewees under oath. 31. The Special Powers Act invested the Comptroller and Auditor General with a jurisdiction and powers which formerly he did not have. Unlike Inspectors appointed under the Companies Act he is a constitutional officer established under Article 33 of the Constitution. His constitutional function is to control on behalf of the State all disbursements and to audit all accounts of monies administered by or under the authority of the Oireachtas. In that regard he is obliged under Article 33(4) to report to Dáil Éireann at stated periods as determined by law. 32. In 1993 his jurisdiction was extended to the audit of Health Boards and Vocational Educational Committees. All of these bodies can, of course, be considered as being within the State sector. 33. The Special Provisions Act extended his jurisdiction to an area where formerly he had none. Under it he is entitled to investigate financial institutions with a view to ascertaining whether or not they have complied with their obligations concerning the payment of DIRT. This is done because of a concern (as is clear from the resolution passed by the Dáil on the 17th December, 1998) concerning a substantial risk to the revenues of the State. True it is that in the conduct of his investigation the Comptroller and Auditor General has many of the powers similar to those enjoyed by Inspectors appointed under the Companies Act . For example, he may take evidence on oath and may require the production of documents. However, the object of the exercise is fundamentally different to that being carried out by Inspectors. 34. The Comptroller and Auditor General must present a report to the Dáil. What the Dáil does with the report is entirely a matter for it. It is clear, however, that whatever it does it cannot exercise judicial powers such as those contained in the companies legislation. 35. It seems to me that the thrust of the investigation being carried out by the Comptroller and Auditor General has to do with a possible loss of revenue to the State as a result of a failure on the part of a financial institution to comply with its DIRT obligations. It will be concerned with the efficacy of the revenue collection of DIRT. It is an industry-wide investigation. It does not single out any particular financial institution. It is primarily concerned with revenue which may have been lost to the State. 36. The focus of the Inspectors' investigation is concerned with whether or not unlawful practices existed in the bank concerning the evasion of revenue obligations. If so then this Court will be concerned with such behaviour only insofar as the company under investigation is concerned. 37. There can be little doubt that there may well be an area of overlap between the two enquiries but it cannot be said in my opinion that there is a "duplication of process" in the sense which is relied upon by the Applicants. There may well be a similarity in the procedures utilised by the Comptroller and the Inspectors. But the purpose of the exercise, the object sought to be achieved by it and the steps to be taken on foot of it are entirely dissimilar and distinct. 38. It appears to me, therefore, that the Applicants are not correct when they seek to argue that there is here any true duplication between the two investigations. 39. Lest, however, that I am wrong in this conclusion I will turn now to consider whether any of the legal doctrines relied upon would be applicable even if the processes could be regarded as involving a duplication. DOUBLE JEOPARDY 40. The Applicants contend that they are being doubly jeopardised by the existence of the Inspectors' investigation into DIRT compliance and that of the Comptroller and Auditor General. They say that, as a principle of law, that should not be permitted and accordingly they invite me to make the Order sought. For reasons which I will give in a moment, I am quite satisfied that they are incorrect in this contention. Even if they were, however, in any case in which the principle has been applied to prohibit a proceeding, it has always occurred in the case of the second such proceeding in time. In the present case the Inspectors' investigation long antedated the Comptroller and Auditor General's investigation but no attempt has been made by the Applicants to seek to prevent his investigation proceeding as against them. 41. The principle of double jeopardy is normally one associated with the criminal law. It may arguably extend to other tribunals which exercise disciplinary functions. That is not a matter that I have to decide on this application. What is not in doubt, however, is that although authorities were cited from all over the common law world by the Applicants, they were unable to cite a single authority which sought to extend the principle to fact-finding investigations of the type being conducted by the Inspectors and the Comptroller and Auditor General. It is to be noted that neither of these entities have other than a reporting function. They cannot themselves impose penalties or make Orders which are self-executing. 42. Insofar as the criminal law is concerned, it is clear that the report of both the Comptroller and Auditor General and the Inspectors will be sterile of legal effect. In this regard the words of Finlay C. J. in Goodman International v. Mr. Justice Hamilton [1992] 2 I. R. 542 at 588 are apposite:- "The Tribunal has no jurisdiction or authority of any description to impose a penalty or punishment on any person. Its finding, whether rejecting an allegation of criminal activity or accepting the proof of an allegation of criminal activity, can form no basis for either the conviction or acquittal of the party concerned on a criminal charge if one were subsequently brought, nor can it form any basis for the punishment by any other authority of that person. It is a simple fact-finding operation, reporting to the Legislature". 43. Whilst that is true of a public inquiry, it is equally true of a report prepared by either the Comptroller and Auditor General or the Inspectors. 44. I am of the view that the Applicants are not in any jeopardy as a result of these inquiries, still less in double jeopardy. 45. Even if the principle of double jeopardy did apply, it is clear that it is a narrow principle of limited effect. It concerns itself with identical or similar charges not with identical evidence. In Connelly v. DPP [1964] AC 1254 Lord Morris of Borth-y-Gest set out the governing principles concerning it applicability. In the course of his consideration of those principles he said at 1306:- "..... what has to be considered is whether the crime or offence charged in the later indictment is the same or is in effect or is substantially the same as the crime charged (or in respect of which there could have been a conviction) in a former indictment and that it is immaterial that the facts under examination or the witnesses being called in the later proceedings are the same as those in some earlier proceedings" . 46. This decision was cited with approval by the Supreme Court in O'Leary v. Cunningham [1980] IR 367 at 379 per Kenny J. Connelly's case was applied by the Court of Appeal in England in R -v- Beedie [1998] QB 356 a case relied upon with some force by the Applicants. The Court of Appeal held that the doctrine was to be defined narrowly and applied only where the same offence was alleged in the second indictment as in the first. It seems to me that this case did no more than apply the principles established in Connelly's case. 47. I do not find any inconsistency with this approach in the Irish case relied upon by the Applicants namely McGrath -v- The Commissioner for An Garda Síochána [1991] 1 IR 69. There the Applicant who was a member of the Garda Síochána was charged before the District Court with embezzlement of sums of money received by him by virtue of his employment. He was acquitted by a jury in the Circuit Court on these charges. He subsequently received notification that he was to be charged with breaches of Garda discipline including three charges of corrupt or improper practice. He applied for prohibition directed to the Commissioner to prevent him from holding an inquiry. The Supreme Court held that to reopen an allegation of dishonesty which had been clearly determined by a jury verdict given on the merits for the purpose of re-exposing the Applicant to the possibility of punishment, amounted to an unfair and oppressive procedure which should be restrained by the Court. It expressly declined to determine the question whether the doctrine of res judicata was applicable to the case. Furthermore, Finlay C. J. made it clear that there was no general principle that an acquittal on a criminal charge, irrespective of the reason for such acquittal, amounted to an estoppel which would prevent a disciplinary inquiry being held into matters arising from the same facts. More to the point however, in the course of his judgment, Hederman J. made it clear that there is a distinction to be drawn between the consequences that might flow from any purely civil action and the disciplinary hearing procedure. He pointed out that the disciplinary hearing was more serious in its consequences than a mere civil action. This case makes it clear that the doctrine applies to the bringing of similar charges and not with the prosecution of different claims which may have similar or identical evidence or witnesses involved. In Mooney v. An Post [1994] E. L. R. 103 Keane J. rejected the proposition that in every case where an employee is acquitted on criminal charges his employer is thereafter precluded from considering whether he should be dismissed because of the circumstances which gave rise to the charges. His judgment was affirmed by the Supreme Court [1998] E. L. R. 238. This adds further support to the view which I take on this point. RES JUDICATA 48. The gist of the argument which is put under this heading is that the Court should not permit two bodies empowered by different statutes to investigate and rule upon the same subject matter because to do so would place the Applicants in the unfair position whereby the body which reports second is not bound by the findings of the body which reports first. It is of course correct to say that neither of the investigatory bodies is bound by the facts found by the other. Indeed it is even conceivable that they might arrive at different conclusions. However, it does not appear to me that, given the nature of the inquiries that are being pursued and the status in law of the reports which will be produced, this doctrine has any application here. 49. Such a risk of course arises in the case of criminal proceedings which are followed by civil proceedings arising out of the same incident. In general, however, the existence of a criminal acquittal will not bar subsequent civil proceedings arising out of the same facts. 50. A number of cases show this to be so. (See Murray v. Fitzpatrick [1914] 48 ILT 305; Donnelly v. Ingram [1897] 31 ILTR 139). The existence of different burdens of proof between criminal and civil actions has even been the basis for refusing to prevent later civil proceedings. (See O'Donnell v. Hegarty [1941] IR 538 and Meath County Council v. Daly [1987] IR 391). 51. Reliance was placed upon the decision of Gavan Duffy J. in Athlone Woollen Mills -v- Athlone UDC [1950] IR 1. In that case that judge held that a decision of a planning authority under the then planning legislation was a judicial decision to which the doctrine of res judicata was applicable. In my view the powers of the two bodies in suit here are in no fashion comparable to those of a planning authority. I find against the Applicants under this heading also. SECTION 7(4) OF THE COMPANIES ACT, 1990 52. This Section provides as follows: "Where the Court appoints an inspector under this section or section 8 , it may, from time to time, give such directions as it thinks fit, whether to the inspector or otherwise, with a view to ensuring that the investigation is carried out as quickly and as inexpensively as possible". 53. The Applicants say that the duplication of investigation ensures that the work of the Inspectors is not being carried out as quickly and as inexpensively as possible. The Minister suggests that this is wholly inconsistent with the attitude adopted by the bank to date. She points out that at the time when the bank opposed the extension of the investigation to the company Mr Graham Savage, the Chief Executive of the bank, in his Affidavit referred to the bank being the subject of five other investigations at that time. No attempt was made by the bank to stop any of those investigations nor did the bank appeal the order of 15th June. Furthermore, in the course of that Affidavit Mr Savage made it clear that the Inspectors understood that their brief extended to investigation of DIRT and he went on to swear that "the Inspectors are particularly well placed to determine whether or not they consider it necessary for the purposes of their investigation to investigate also the affairs of any other body corporate which is related to the bank." Whilst these points were made by the Minister it was not sought to argue that the Applicants are now estopped from making the case which they do. However, it does suggest that they may not have been particularly consistent in their approach to the matter. 54. Be that as it may, it seems to me that on this aspect of the matter I must have regard to the views which have been put to me by the Inspectors. They say in the course of their statement to the Court on this issue that "(a) the DIRT issue cannot be successfully excised from the scope of our investigations of the bank or the company and (b) in any event, even if the DIRT issue could be successfully excised (and we do not believe that it can), this would not significantly reduce our burden or achieve the result which the bank and the company hope. On the contrary, we believe that it would, if anything, hamper the efficiency and effectiveness of our investigation" . 55. Whilst criticism has been levelled at this statement, I do not find it persuasive. I regard the Inspectors as being in the best position to know how an order of the type sought would impact upon their investigation. I reject the argument advanced by the Applicants. THE FORM OF THE ORDER SOUGHT 56. Even if I were prepared to accede to the substantive application being made by the Applicants I would not be prepared to make an order in the form in which it is sought even in its re-amended version. To do so would, it appears to me, give rise to the possibility of endless applications to the Court asking it to in effect second guess decisions made by the Inspectors as to what steps they consider necessary in order to report upon the issues. 57. The Inspectors appointed under these provisions are carrying out an important public duty in the public interest. They should not have to carry out their duties whilst constantly looking over their shoulders at the Court in anticipation of decisions made by them in the course of the investigation being the subject matter of a form of judicial review. The formula of words suggested here would give rise to precisely that. 58. It puts no strain on the imagination to conceive of situations where argument would be made to the Court that decisions of the Inspectors as to what they considered necessary were wrong in law or irrational. Such a process would only tend to impede an investigation which is designed to be carried out thoroughly but efficiently. The re-amended form of wording, whilst preferable to that in the first amendment nonetheless has all the potential of creating what Lord Denning M. R. in Maxwell -v- Department of Trade and Industry [1974] 2 All ER 122 at 129 described as a "lawyer's holiday". The Court should be astute to ensure that the terms of reference given to Inspectors appointed by it are clear and well defined so as to obviate the possibility of the creation of such an event. 59. It follows that as far as this aspect of the application is concerned, both as to substance and form, I find against the Applicants and dismiss their application concerning the DIRT inquiry. THE APPLICATION FOR THE SUPPLY OF TRANSCRIPTS 60. The springboard for this application is the interim report of the Inspectors of the 17th December, 1998. I have already referred to parts of that report and the observations of the Inspectors in the final paragraph of it insofar as they are relevant. 61. The Applicants claim an entitlement to all transcripts and supporting documentation relating to the interviews carried out by the Inspectors. This is so whether the interviewees were employees or customers of the Applicants. The Applicants submit that, in order to ensure fair procedures, they should be given copies of these documents and that a failure to do so would be a denial of their rights in natural justice. In this regard they rely heavily upon the decision of the Supreme Court in Re Haughey [1971] IR 217 and also to parts of the judgment of Shanley J. in these proceedings delivered in July 1998. 62. The principal opposition to the application on this occasion came from the Inspectors rather than from the Minister. The Inspectors contend that the application is both factually and legally unsustainable and in any event has already been decided in a final and binding form by Shanley J. in the judgment of the 13th July, 1998. They say that there is here true res judicata insofar as the Applicants are concerned. I will consider the res judicata issue first. RES JUDICATA 63. The bank was a party to the issues decided by Shanley J. He held that the Inspectors' procedure fell into two stages. The first is an information-gathering exercise. The second only arises when the first stage indicates that it is possible that adverse conclusions may be drawn in relation to individuals, dependant in whole or in part on the testimony of others. At the second stage individuals at risk will be entitled to attend, hear the evidence, cross-examine the witnesses and give evidence themselves. There can be no dispute but that the Inspectors have not yet concluded the first stage of their investigation. They are therefore still at the information gathering stage. 64. The rights which are now sought to be asserted derive from the decision of the Supreme Court in Re Haughey [1971] IR 217. The Applicants seek to invoke some of those rights at this stage by seeking the documents in question. 65. In my opinion Shanley J. expressly ruled on this matter where he held "I am satisfied that there is no entitlement to invoke the panoply of rights identified by the Supreme Court at the information gathering stage of the Inspectors' work" . 66. The bank did not seek to appeal that finding by Shanley J. and in my view it is binding and I cannot be asked to reopen it. There is therefore, in my view, res judicata on this issue. 67. Lest however I am wrong on this view I will consider this application on its merits. Before doing so however, I must address one further argument. It was said by the Applicants that even if the views of Shanley J. were binding upon them those views as set forth in his judgment create an entitlement on the part of the bank to obtain the transcripts of the interviews with members of its own staff. The Inspectors made it clear that they would supply a transcript of the interview to each person interviewed by them even at the information-gathering stage provided that the appropriate stenographer's fee was paid. That entitlement appears to me to be personal to the individual interviewee. I cannot see how that entitlement can be extended so as to read into it an entitlement on the part of the bank to such documents. Throughout the hearing staff members were referred to as "our witnesses" by the Applicants. This is but one of a number of mis-conceptions under which the Applicants appear to suffer concerning the nature of an investigation of this type. I will be dealing with these mis-conceptions more fully later in the judgment. 68. I take the view that the Applicants are incorrect in attempting to assert that the procedures set forth by the Inspectors have built into them either explicitly or implicitly an entitlement on the part of the bank to any transcripts of its staff members at the investigative stage. 69. If such a right exists at all, it derives purely from the contractual relationship between employer and employee and is enforceable in private law but not in these proceedings. THE INSPECTORS' REPORT OF THE 17th DECEMBER 1998 70. It is the contents of this report that have brought about the present application. Particular exception has been taken to the material contained in paragraph 10 thereof. In the preceding paragraph of the report the Inspectors gave a statistical breakdown of the pool of potential interviewees who had been called to interview and those who attended. In all seventy five people were interviewed by the time the report was submitted to the Court. At paragraph 10 the Inspectors went on as follows:- "In the course of the interviews conducted to date, evidence was given before us, by persons who invested in one or other of the insurance policies, of the manner in which the policies were promoted and sold, and as to a number of related matters. We set out below aspects of this evidence which in our opinion are particularly relevant to our investigation. Each item comes from the evidence of persons interviewed. w The investor did not understand the investment he was making and did not have it explained to him. w The investor was not told in the case of the CMI Personal Portfolio product that his investment was for a period of five years, and that there were significant penalties on full encashment prior to the expiry of the term. w The investor was not told of the existence or amount of the initial set-up charges and annual charges, nor that there were different options as to the manner of payment of the charges. w The investor was not given the brochure which explained the nature of the policy. w The investor was asked to sign parts of the application form in blank. w The investor was not told that in one part of the application form he appointed the bank's Financial Advice and Services Division as his investment advisor and another part instructed CMI as to how his money was to be invested. w The investor was not told that the money he was investing would be deposited by CMI in a branch of the bank, usually the branch where it had formerly been deposited, at rates of interest and for periods determined by the bank. w It has been stated in the course of the evidence received to date that employees of the bank: w Assisted in the opening and maintenance of bogus non-resident deposit accounts. w Assisted in the opening and maintenance of deposit accounts in fictitious names or with fictitious addresses or both. w Provided fictitious addresses for the opening of bogus non-resident deposit accounts and fictitiously named deposit accounts. w Encouraged the opening of bogus non-resident deposit accounts and fictitious deposit accounts. w Being aware of the existence of monies on deposit account at the bank or on deposit at companies associated with the bank which had not been disclosed to the Revenue Commissioners, arranged for such monies to be targeted for investment in policies of insurance to be effected with companies referred to at 2(a) above. w Assured investors that their investment was totally confidential and would never become known to the Revenue Commissioners. w Advised investors to ignore the 1993 tax amnesty. w Facilitated the opening of deposit accounts by Irish residents at branches of associated companies of the bank outside the Republic of Ireland. w Arranged for the transfer of funds held by Irish residents at branches of associated companies of the bank outside the Republic of Ireland for investment in policies effected by companies referred to at 2(a) above." 71. That part of the report cannot, of course, be read in isolation from the report as a whole and in particular what was stated by the Inspectors in the next following paragraph. I have already reproduced that in full insofar as it is relevant at page 11 of this judgment. Suffice it to say that that paragraph makes it clear that the Inspectors emphasised that they had not yet formed any concluded view on the matters alluded to nor could they do so until officials of the bank were given an opportunity of giving evidence to them. They also made it clear that until such time as they had the opportunity of interviewing the relevant employees of the bank "it is not possible even to commence the process of considering whether the evidence should be accepted or not". 72. The bank was furnished with a copy of this report. It has provoked a storm of protest with heavy and sustained criticism of the Inspectors both in correspondence and in sworn testimony put before this Court. 73. The correspondence began with a letter from Matheson Ormsby Prentice, Solicitors for the Applicants, of the 6th January, 1999. That letter asked for an explanation as to why the Inspectors had reported to the Court. It went on to say that the Applicants were firmly of the view that the report "is deficient and prepared without the due precision, care and attention which our client is entitled to expect" . It said that the scheme of the report and the selection of information contained in it and its tone were seriously prejudicial to the bank. It described the report as inappropriate indeed "so inappropriate as to cause the bank irreparable damage" , and, it went on, it had the "potential to damage the integrity of the investigative process" . The letter went to say that the interviews carried out with the seventy five persons had been used "to found untested assertions concerning actions of unnamed employees of the bank" . The letter then calls for copies of the transcripts of the interviews and the other documentary evidence. Finally, it points out to the Inspectors that "you are not entitled to draw conclusions from such matters without affording our client the opportunity to cross-examine the witnesses concerned and to make appropriate submissions". 74. One could be forgiven for thinking that this letter was written as though paragraph 11 of the Inspectors' report did not exist. A very full response was forthcoming from the Inspectors' Solicitors. Insofar as is relevant it points out, and in my view correctly, that the report does no more than record matters which have occurred during the period covered by it and scrupulously avoids expressing conclusions or opinions in relation to any of the matters set out therein. It also points out that it is implicit in the allegations made against the Inspectors that the Applicants consider that the Inspectors have drawn conclusions without affording the Applicants an opportunity to cross-examine witnesses or to make submissions. This is correct. It is impossible to understand how the Applicants could seek to so infer in the light of the statement contained in the final paragraph of the report. That statement in paragraph 11 of the report is consistent with the procedures which were approved of by this Court. The letter goes on "the suggestion that the Inspectors may have come to a conclusion on any matters in respect of which evidence is given is manifestly false" . Insofar as an allegation was made that the interviews had been "used to found untested assertions concerning actions of unnamed employees of the bank" , the Inspectors' Solicitors pointed out that such an allegation was unjustified. The interviews, they say, have not been so used by the Inspectors and no assertion, untested or otherwise has been made. This seems to me to be borne out by the precise wording of paragraph 11 of the Inspectors' report. 75. Notwithstanding this however, a letter of the 21st January, 1999 from the Applicants' Solicitors indicated that they stood over their criticisms of the interim report. In this letter they inter alia allege that many of the "conclusions" are regrettably vague and couched in the language of prejudice. 76. For my part I can find no conclusions drawn in the Inspectors' report. In fact the contrary is the case. They are careful to indicate that they have not even yet made a decision on whether the evidence outlined in paragraph 10 should be accepted or not. The letter goes on to suggest that the language used by the Inspectors would be more suitable to "a media report than a report by Court-appointed Inspectors who are required to critically and objectively analyse information presented to them as evidence". They then allege imprecise use of language which amount to inferences by the Inspectors based on the material gathered rather than the material itself which leads the bank "to believe that your clients may have prejudged the conduct of members of the bank staff without providing those staff members with an opportunity to defend themselves. This has the potential to damage the integrity of the investigative process" . Again I cannot see any justification for this criticism having regard to the clear statements contained in the final paragraph of the Inspectors' report. Later the letter says that the report suffers from a number of significant defects because the Inspectors did not attempt to indicate how their work had been planned, precisely what work had been done, how that work was done, by whom and when the work was done. Furthermore, it is said that the Inspectors did not indicate in any detail precisely what further work they would require to do in order to complete their report. The Inspectors are also criticised for not giving an indication of the cost of the work to date. All of this is said to demonstrate "a lamentable lack of balance and objectivity in the interim report". 77. In my view these criticisms of the Inspectors' report are quite unjustified. Notwithstanding the exchange of correspondence where the Inspectors comprehensively rejected (and in my view correctly) the allegations made against them, the Applicants nonetheless stand over them. They do so not merely in correspondence but by Affidavit. For example, Patricia O'Sullivan Lacey, the secretary of the Applicants, in her Affidavit of the 3rd February, 1999 speaks of the "seriously prejudicial conclusions, which, remain entirely untested, included in the interim report" . She alleges that the report demonstrates "a lack of balance and objectivity on the part of the Inspectors" . The Inspectors are accused of failing to "critically and objectively analyse information presented to them" . 78. I do not find any basis to justify the making of these allegations. As I have already said they could only fall to be made if paragraph 11 of the Inspectors' report is ignored in its totality. There can be no justification for so doing. 79. Notwithstanding the very serious allegations of lack of objectivity, lack of due care and attention in the preparation of the report, lack of precision in the contents of the report and the possible demonstration of pre-judgment of the conduct of members of the bank staff, no application has been made to quash or challenge in any way the interim report prepared by the Inspectors. Neither has there been any application made to seek to remove the Inspectors or to prohibit them from further continuing with their investigation. In my view there is no factual basis for so doing. It is regrettable that the Applicants chose to make these unjustified allegations. 80. There is, in my opinion, no factual basis upon which on the merits, this application could be granted. THE LEGAL POSITION 81. The Applicants say that having regard to the position in Re Haughey [1971] IR 217 they should now be entitled to the documents which they seek. This is so notwithstanding the fact that the Inspectors are at this stage only engaged in the first stage of their investigation, namely information-gathering. I have formed the view that the Applicants have misconceived the functions of Inspectors appointed under the provisions of the Companies Act, 1990 . An inspection of this type is primarily investigative. It only becomes adversarial in limited circumstances. In Chestvale Properties Ltd. -v- Glackin [1993] 3 IR 35, Murphy J. cited with approval the observations of Sachs L. J. in Re Pergamon Press Limited [1971] Ch. 388. That judge said that Inspectors appointed under the Companies Acts start "very often with a blank sheet of knowledge [and] have to call for information in whatever way it can best be obtained. That may be by interview, it may be from statements obtained in writing, it may be from accounts and other documents, or it may be by their exercising their powers under Section 167 , subsection 3 to put questions to individuals, either on oath or not on oath. One way or another it may be a considerable time before the inspectors have before them sufficient information to see any pattern in the affairs of a company. Even when this pattern commences to take shape, they may need further material before the possibility emerges of any criticism attaching to individuals. Moreover, that possibility may derive from documentary evidence which is in substance uncontested, or it may derive from a matter on which there may be a conflict of evidence between some witness and the person to whom blame may be attributed. In the latter case there may come the stage when the inspectors have to decide whether simply to record that conflict or whether to seek to resolve it. The more complex the affairs of the company and the greater the number of subsidiary companies, the longer it may take before those respective stages are reached". 82. Murphy J. went on to say:- "The present proceedings were instituted when the inquiry had reached only a very preliminary and exploratory stage. ... Even if the presumption were otherwise and that one should anticipate a stage being reached in which the Respondent would find it necessary to make a choice as between conflicting claims, it is clear that that stage has not yet been reached. Accordingly, the present application is premature insofar as it is based upon the contention that the inspector is engaged in a task which at present involves him in a quasi-judicial function". 83. In the present case it is to be noted that the Inspectors are only at a preliminary stage of their investigation and have not been called upon to exercise any quasi-judicial functions since that will not arise until stage two is reached. At stage two of their investigation they have, in my view, made it clear that all of the rights to which a party might be entitled under the decision in Re Haughey will be respected. 84. The English inquiry which gave rise to the decision in Re Pergamon Press Ltd. spawned further litigation which was also dealt with in the Court of Appeal. It was Maxwell -v- The Department of Trade and Industry and Ors [1974] 2 All ER 122. There Lord Denning M. R., called attention to what an investigation under the Companies Act is not. He said, at page 127:- "Remember what it is not. It is not a trial of anyone, nor anything like it. There is no accused person. There is no prosecutor. There is no charge. It is not like a disciplinary proceeding before a professional body. Nor is it like an application to expel a man from a trade union or a club, or anything of that kind. It is not even like a committee which considers whether there is a prima facie case against a person. It is simply an investigation, without anyone being accused." 85. Insofar as this jurisdiction is concerned that, in my view, is a correct summary of the position which obtains at least insofar as the investigatory stage of the Inspectors' task is concerned. Once one moves into the second stage then, whilst the investigation is not transformed into an adversarial hearing, nonetheless fair procedures have to be observed insofar as any adverse conclusions may be drawn in relation to individuals. The procedure which the Inspectors have outlined as one which they will follow if such a stage is reached is in complete compliance with their obligations to observe fair procedures under the relevant jurisprudence. It follows therefore, that I take precisely the same view as did Shanley J. that there is no entitlement to invoke the rights established in Re Haughey at the information-gathering stage of the Inspectors' work. 86. There remains just one further argument to be dealt with. It has been said on the part of the Applicants that Shanley J. described the rights identified by the Supreme Court in the case of Re Haughey as rights which the Court believed should be afforded to a person who had been accused of conduct reflecting on his character and good name and where the accusations were made upon the hearsay evidence of a witness before the public accounts committee of Dáil Éireann. He went on then to state that whilst allegations of the commission of criminal offences had been made in the media against the bank, the case differed from the Haughey case where the accusations were made by evidence under oath. It is submitted that this was the distinguishing feature which triggered the Haughey rights. Two observations may be made concerning this submission. First, whilst the Applicants are correct in pointing out the distinction which Shanley J. drew between unsworn allegations and allegations which were given in the form of evidence nonetheless in the immediate following paragraph of his judgment he makes it clear that there is no entitlement to invoke the panoply of rights identified by the Supreme Court at the information-gathering stage of the Inspectors' work. 87. Secondly, whilst the distinction is drawn between allegations made in newspapers and evidence tendered on oath, it does not appear to me that such a distinction triggers the entitlement to the rights identified in the Haughey decision. The examination of interviewees under oath is but one of the methods available to Inspectors conducting an investigation under the Companies Act . But it is not the mere fact of the making of an allegation under oath which elevates the status of an accusation to one which calls for a response. What brings that about is a determination by the Inspectors (a) that they will admit such an allegation as evidence and (b) that the admission of it may give rise to adverse conclusions being drawn against the party accused. It is then and only then that the rights identified by the Supreme Court in Re Haughey come into play. 88. In his closing submission, Counsel on behalf of the Applicants sought to argue that they are in the position of an accused person and that such a person is entitled to have a book of evidence served upon him so as to enable him to prepare his case. A similar right should be afforded to the Applicants it is said. This analogy, in my view, underscores the unsustainable nature of this application. 89. True it is that an accused person is entitled to a book of evidence. But before that stage is reached there is (a) a Garda investigation, (b) the submission of the appropriate papers to the Director of Public Prosecutions, (c) a decision by the Director of Public Prosecutions to prosecute and (d) the preferring of the charges with a view to a preliminary investigation and a return for trial. 90. If the analogy with a criminal case is accepted, it is clear that at this stage neither of the Applicants could be regarded as the equivalent of an accused person. This investigation is only at the same stage as the preliminary police investigation. Counsel could not cite any authority to the effect that a potentially accused person is entitled to copies of statements made to the police in the course of their investigation. I do not believe that there is any such authority. Neither could there be any legal basis for such an entitlement. First, the police investigation may not result in any charges being preferred and secondly, such an exercise would entirely hamper the conduct of an investigation. In my view, the same result would be had here. When the Inspectors come to stage two of their investigation there may be nothing for the bank or the company to answer. Secondly, the correspondence from the Solicitors for the Applicants makes it clear that they wish to have these documents so that they may at this stage respond to the allegations made. Such an exercise would merely prove a hindrance to the Inspectors in the carrying out of their functions, is unnecessary and would be wasteful of both time and resources. CONCLUSIONS 91. For the reasons that I have already stated I am satisfied that neither of the applications before me should succeed. 92. I have already made it clear that the Court disapproves of the unjustified criticism and the intemperate language that was used to make it concerning the work undertaken by the Inspectors. It is also a matter of regret that the Inspectors have had to place on record their belief that the Applicants have not co-operated with them to the utmost extent possible. I hope that it will not be necessary for the Inspectors to repeat such a view in the future. 93. These applications are dismissed. © 1999 Irish High Court BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII