Friday 20 October 2017

Ex-directors of Quinn Insurance lose High Court case over Central Bank inquiry

The High Court, Dublin
The High Court, Dublin

Tim Healy

Two former directors of Quinn Insurance Ltd (QIL) have lost a High Court challenge to a Central Bank inquiry into whether they participated in regulatory breaches before the firm collapsed.

Liam McCaffrey and Kevin Lunney, as former directors of QIL, were notified in October 2011 that as persons concerned in the management of the company, the bank considered it necessary to examine whether there were reasonable grounds to suspect they may have participated in contraventions between 2005 and 2008. The alleged breaches were under the 1942 Central Bank Act and 2004 Central Bank and Financial Services Authority of Ireland Act.

A three-person inquiry was set up, with a retired judge as chair, and there followed exchanges of correspondence between lawyers for the Bank/Attorney General and the two men.

The men complained the inquiry process was oppressive and unreasonable and questioned its constitutionality.They also sought assurances their legal costs of the inquiry would be paid if they were cleared.

They were told there was no provision in the law to pay such costs and they then brought judicial review proceedings.

Among their claims were that the inquiry was tainted by want of fair procedures and it involved the impermissible exercise of judicial power. It was also unconstitutional because there was no provision for payment of their costs, they said.

The Bank and the Attorney General denied the claims.

On Tuesday, Mr Justice Seamus Noonan dismissed their cases saying their applications were premature and hypothetical.

They must await the outcome of the inquiry before seeking to bring a court challenge like this as none of the adverse consequences they complain of may ever eventuate, he said.

He also rejected their claim in relation to impermissible use of judicial power as it had already been dealt with in a previous case which he must follow.

There was no constitutional infirmity in the administrative sanctions procedure, provided for under the legislation, by virtue of the fact that the two men may not recover their own costs or because costs may be awarded against them, he said.

He also said the inquiry members had correctly determined the onus of proof to be applied by it is the civil (balance of probabilities) standard and not the higher (beyond a reasonable doubt) criminal standard.

He found their proceedings constituted an impermissible attack on unchallenged decisions of the inquiry members and also on guidelines prescribed for the conduct of such inquiries.

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