Friday 22 June 2018

INM bid to quash ODCE decision to seek appointment of inspectors fails

Independent House, Talbot Street, Dublin
Independent House, Talbot Street, Dublin

Andrew Phelan

Independent News and Media has failed in a legal challenge to the corporate watchdog’s decision to apply for inspectors to be appointed to the company.

The High Court today ruled against INM, which had sought to quash a decision by the Office of the Director of Corporate Enforcement to seek the appointment.

Mr Justice Seamus Noonan's judgement paves the way for the ODCE director Ian Drennan to go ahead with his application, which will be heard on a later date.

The investigation centres on a range of corporate governance issues at the country’s largest media group and the inspectors would have far-reaching powers of inquiry.

This morning, Judge Noonan said he was dismissing INM’s application to quash the ODCE’s decision.

He said  INM’s fundamental proposition that it had a right to be consulted before legal proceedings are instituted by a public body is “novel and unprecedented” and, as a matter of law, “cannot be sustained”.

If INM has an answer to the concerns raised by the ODCE, that may mean, when the application is actually heard, inspectors will not be appointed, he said.

The court could not take cognisance at this stage of any damage INM claimed to have suffered as a result of the ODCE decision, the judge said.

There was an important public interest in the functions performed by the ODCE, he said.

The ODCE initiated the application for inspectors over concerns about an alleged data breach at INM in 2014 and other issues arising from protected disclosures made by company’s CEO Robert Pitt and INM Chief Financial Officer Ryan Preston in 2016 and 2017.

In its judicial review proceedings, INM argued there was no basis for the appointment of inspectors and maintained the ODCE application was made in breach of its right to fair procedures. The ODCE countered that there was no legal obligation on the watchdog to consult the company.

The case will be mentioned again before the High Court next Wednesday, to fix a date for the hearing of the ODCE application.

Mr Justice Noonan said INM’s proposition that it had a right to be consulted prior to the institution of legal proceedings by a public body was “novel and without precedent.”

He was satisfied that as a matter of law “such a proposition cannot be sustained.”

He said if INM was correct in submitting that it has an answer to all the respondent’s concerns, “it now has the fullest opportunity of putting this before the court which may well be persuaded that it should decline the application.”

Much of INM’s complaint appeared to concern the appointment of inspectors as distinct from the application to do so, he continued.

He said INM's suggestion that the ODCE had “reached conclusions” in its affidavit grounding the application was “somewhat surprising.”

It was difficult to see how the ODCE could ever make an application for the appointment of inspectors without “expressing some views on the state of affairs with which he is confronted," he said.

“These are plainly not determinative of anything and it will ultimately be a matter for the court to accept them or not,” Judge Noonan continued.

He said he rejected the submission that INM’s case was “in some sense exceptional or unique.”

Although counsel for INM said all that was required was a “brief statement of the reasons for the application and a few days to give a response,” Judge Noonan said “it is difficult to accept that in reality this is what would occur.”

If INM was entitled to fair procedures and a right to consult it “must surely follow” that the full spectrum of rights would be routinely sought in every case.

“Were that to be the position, the prospect looms large of the respondent becoming embroiled in lengthy, complex and costly procedures akin to quasi criminal trials held entirely in private,” Judge Noonan continued.

It was hard to envisage how in practice such a system could be workable, he said.

It was also difficult to see how this could be regarded as consistent with the public interest in the important corporate oversight functions performed by the ODCE.

“Not only would this ultimately become the endlessly self-replicating procedure identified… but it would debilitate the system,” he said.

Ultimately, Judge Noonan said in his view, “any damage allegedly suffered by the applicant is but an incident of incorporation, the consequences of which, both positive and negative, must be accepted by the applicant.

Minutes later, High Court president Mr Justice Peter Kelly said the ODCE’s case would be mentioned next Wednesday.

Judge Kelly then heard the Central Bank wished to renew an application for access to legal documents filed in the case by the ODCE and INM.

He asked counsel for the Central Bank to indicate in an affidavit what documents were being sought, returnable also to next Wednesday.

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