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National Irish Bank, Re (No. 1) [1998] IEHC 116; [1999] 3 IR 145; [1999] 1 ILRM 321 (13th July, 1998)
THE
HIGH COURT
No.
89 COS
IN
THE MATTER OF NATIONAL IRISH BANK LIMITED (UNDER INVESTIGATION) AND
IN
THE MATTER OF THE COMPANIES ACT 1990.
JUDGMENT
delivered the 13th day of July 1998 by Mr. Justice Peter Shanley
.
1. On
the 30th March, 1998 the Hon. John Blayney, a retired Judge of the Supreme
Court, and Thomas Grace, FCA, were appointed by the High Court on the
application of the Minister for Enterprise and Employment pursuant to Section
8(1) of the Companies Act, 1990 to be joint inspectors to investigate and
report on the affairs of National Irish Bank Limited relating to:-
(i) The
improper charging of interest to accounts of customers of the said National
Irish Bank Limited between 1988 and the 30th March, 1998;
(ii) The
improper charging of fees to accounts of customers of the said National Irish
Bank Limited between 1988 and the 30th March, 1998;
(iii) The
improper removal of funds from accounts of customers of the said National Irish
Bank Limited between 1988 and the 30th March, 1998;
(iv) All
steps and action taken by National Irish Bank Limited 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 said National Irish Bank
Limited 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 National Irish Bank Limited
which served to encourage the evasion of any revenue or other obligations on
the part of the bank or third parties.
2. The
High Court having so appointed the Inspectors, directed them to investigate the
said matters and deliver an interim report to the High Court not later than the
22nd June, 1998. Prior to that date, the Inspectors sought the Court's
directions on a number of matters in consequence of which Mr. Justice Kelly
pursuant to Section 7(4) of the Companies Act, 1990 directed, on the 11th June,
1998, that there be a trial of issues identified in a draft Notice of Motion
then proffered to the Court by the Inspectors. The following are the issues:-
1. A
determination that persons (whether natural or legal) from whom information,
documents or evidence are sought by the Inspectors in the course of their
investigation under the
Companies Act, 1990 are not entitled to refuse to
answer questions put by the Inspectors or to refuse to provide documents to the
Inspectors on the grounds that the answers or documents may tend to incriminate
him, her or it.
2. A
determination that the procedures outlined by the Inspectors in their letters
dated the 4th June (contained within Exhibits C and D to the Affidavit of John
Blayney and Tom Grace sworn herein on the 11th June, 1998) are consistent with
the requirements of natural and constitutional justice.
3. Mr.
Justice Kelly, in his Order of the 11th June, 1998, directed service of the
Notice of Motion on National Irish Bank Limited (herein called NIB), the
Attorney General, the Minister for Enterprise and Employment and on an employee
representing all employees and agreed by such employees to represent them.
4. In
an Affidavit sworn on the 11th June, 1998 the Inspectors indicated the work
undertaken by them up to that point in time. They indicated that they had
written to the bank and all its current and former employees who held office
since 1988 asking for any information or documents relevant to the enquiries of
the Inspectors. The Inspectors also advertised in the newspapers and also set
about arranging interviews. After writing to these employees, they received
correspondence from solicitors acting for such employees or from employees
themselves. In summary that correspondence asserted that the employees (or
former employees of NIB) had:
(a) The
right to be legally represented at any interview.
(b) The
right to be legally represented and present when evidence was given concerning
their clients.
(c) The
right to cross-examine anyone giving evidence concerning their clients.
(d) The
right to advance notice of questions to be asked at interview.
(e) The
right to all documents concerning their clients.
(f) The
right to refuse to answer questions where the answer might possibly incriminate
them.
5. Having
regard to these assertions and concerns, the Inspectors wrote to the Solicitors
for the employees or former employees of NIB on the 4th June, 1998. Their
letter to Mason Hayes & Curran (who represented seventy-five employees) was
as follows:
"Dear
Sirs,
1 National
Irish Bank Limited
Your
clients John O'Reilly and Others
We
refer to your letter of the 21st May, 1998, your fax of 26th May, 1998 and our
subsequent meeting with your Mr. Hoy and Mr. McDowell S.C. Arising from that
correspondence and meeting it may be helpful to set out the approach we intend
to take in relation to certain issues discussed.
1
1. Right
to refuse to answer questions on the ground of
self-incrimination.
We
have been advised that a person giving evidence to Inspectors pursuant to
Section 10 of the Companies Act, 1990 is not entitled to refuse to answer any
question on the ground that the answer may tend to incriminate him or her. We
understand that you may take a different view or at least do not consider that
you can advise your clients to accept without determination of the issue by the
Court, that they are not entitled to refuse to answer questions on this basis.
Without pre- judging the course the inspection may take, we also understand
that this issue is likely to arise in the course of interviews and indeed you
have expressed concern that one or other of your clients might somewhat
arbitrarily become the subject of a test case.
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 will 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.
3. Request
for assistance by letter the 8th May, 1998.
The
matters the subject matter of this inspection have already been the subject of
public discussion and internal and external enquiries. We believe your clients
ought to be able to provide this assistance promptly and we look forward to
receiving such documentation and information as your client possesses, as soon
as possible and in particular without awaiting the outcome of any proceedings
which may be initiated to clarify other issues. In this regard we confirm that
the documents referred to are documents in your clients own possession.
We
understand from the meeting of the 25th May, 1998 that your clients as
presently advised do not accept that they are not entitled to refuse to answer
questions on the ground of self-incrimination when interviewed by the
Inspectors. You might confirm that this remains the case. If so, it is our
intention to bring the matter before the Court at the earliest possible
opportunity to obtain a definitive ruling and avoid unnecessary delay, expense
and confusion. It is not clear if your clients also take issue with any aspect
of the procedure we propose to adopt. If they do, we invite you to so inform
us immediately in order that this issue could also be determined at the same
time and any unnecessary delay avoided.
We
await hearing from you.
Yours
faithfully,
JOHN
BLAYNEY and TOM GRACE
JOINT
INSPECTORS
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 given evidence themselves.
John
O'Reilly, the manager of the Limerick branch of National Irish Bank Limited, is
the employee of NIB agreed by his fellow and former employees to represent them
on the hearing of this Notice of Motion. He has been since 1969 an employee of
Northern Bank Limited, now known as National Irish Bank Limited. In an
Affidavit sworn by him on the 24th June, 1998, he indicated the concerns of
himself and his fellow employees and former employees that if they are to
answer questions posed by the Inspectors they should be entitled to avail of
the privilege against self-incrimination. He further indicated that this Court
should decide not only whether he was compelled to answer such questions but
also whether such questions could be used against him in subsequent legal
proceedings.
THE
RIGHT TO SILENCE AND THE PRIVILEGE AGAINST SELF-INCRIMINATION
The
common law privilege against self-incrimination has been part of English law
since the constitutional struggles which resulted in the abolition of the
Courts of Star Chamber and High Commission in the second half of the 17th
century. While the word "privilege" has been associated with the phrase since
those early days, it should be said that the privilege against
self-incrimination has always encapsulated a right in the individual to refuse
to answer a question or produce a document when to do so would in the opinion
of a Court tend to expose such an individual to a real risk of criminal
prosecution or penalty. The right is one which is vested in witnesses before
Courts and in all persons subjected to investigations whether they be formal
investigations or not.
There
are a number of important values underlying the privilege: it is, first and
foremost, concerned with respecting the will of an accused person to remain
silent; but it is also a privilege which recognises the right to privacy: as
Lord Mustill said in his speech in
R.
-v- The Director of Serious Fraud Office
1993 AC 1 at page 29, the right is a
"reflection
of the common view that one person should so far as possible be entitled to
tell another person to mind his own business".
A further reason justifying the privilege was the prospect of an accused's
guilt being extracted or established solely on his own testimony: such a
process was offensive to the common law's latterday sense of
"fair
play"
and, according to Lord Mustill, it was thus unfair to put a person in a
position where he was exposed to punishment whatever he did:
"If
he answers he may condemn himself out of his own mouth; if he refuses he may be
punished for his refusal".
6. While
respect for fair procedures, the right to privacy and silence all fostered the
growth of the privilege and its extension to extra-curial contexts, its
origins, as I have indicated, were provided and provoked by a reaction to the
abuses perpetrated by the Judges of the Star Chamber in the misuse of
interrogation under oath.
In
Heaney
-v- Ireland
1994 3 IR 593, Costello J. (as he then was) analysed with clarity the
"common
law right to silence"
(as he described it). He said (at pages 603 and 604):-
"1. The
right to silence can arise in a variety of different circumstances. The nature
and scope of the right and the reasons why it was conferred by law can differ
in significant ways and will depend on the circumstances in which it is
conferred and exercised
2.
The
right to silence can properly be referred to as an immunity or privilege
against self-incrimination. This immunity has also been termed by the Supreme
Court as
'the
right to protection against self-incrimination'.
3.
When
a person is arrested as a suspect and subsequently charged with an offence two
discrete immunities are conferred by the common law. The common law recognises
(a) the
immunity against self-incrimination of a suspect and
(b) the
immunity against self incrimination of an accused person
during
his trial.
The
suspect's immunity was developed to avoid the risk of untrue confessions being
obtained from a person while in police custody. The law does not prohibit a
suspect from confessing to a crime - nor does it prohibit the questioning of a
suspect in custody. It provides however, that a suspect should not be required
to answer questions on pain of punishment should he not wish to do so; that he
is free to remain silent should he so choose and that he should be informed of
his right to do so. An accused's immunity was developed from the objections
taken by the common law Courts to the abuses arising from Court procedures
involving the judicial interrogation of accused persons. As a result, an
accused cannot be required to give evidence on his own behalf and is entitled
to remain silent during it and not to be questioned either by the prosecution
or
the presiding judge.
4.
The
common law immunity against self-incrimination also exists in favour of a
person who is subject to interrogation by a person in authority other than a
police officer."
7. O'Flaherty
J., delivering the Judgment of the Supreme Court in
Heaney
-v- Ireland
1996 I IR 580, noted that an Irish text on the law of evidence (Gilbert's law
of evidence) published in Dublin in 1794 stated:
"Our
law differs from the civil law, that it will not force any man to accuse
himself and in this we certainly follow the law of nature which commands every
man to endeavour his own preservation and therefore pain and force may compel
men to confess what is not the truth ....".
THE
RIGHT TO SILENCE, THE PRIVILEGE AGAINST SELF-INCRIMINATION AND THE CONSTITUTION
8. Nowhere
in the Constitution is the right to silence or the privilege against
self-incrimination expressly recognised. In
The
People (the Director of Public Prosecutions) -v- Quilligan (No. 3)
,
Supreme Court, 14th July, 1992, Finlay C.J. expressing the view of the Court
said:-
"The
Court does not find it necessary therefore to express any view on the question
as to whether in what circumstances or subject to what qualifications if any a
right of silence or self-incrimination is an unenumerated right pursuant to the
Constitution".
In
Heaney,
supra
,
Costello J, held that the immunity (of an accused at his trial) whereby he is
not obliged to give evidence or be required to adduce evidence on his own
behalf or be questioned against his will was such a basic concept of criminal
trials that it was:
"["So]
widely accepted as basic to the rules under which criminal trials are conducted
that it should properly be regarded as one of those which comes within the
terms of the guarantee of a fair trial contained in Article 38.1".
(at
p. 606)
9. In
the Supreme Court, the Court declined to reach a conclusion as to whether
Article 38 was applicable or not, but O'Flaherty J., speaking for the Court,
said
(at
page 589):-
"The
right to freedom of expression necessarily implies the right to remain silent.
The provisions of statutes of the British Parliament are not necessarily a safe
guide to what is constitutionally permissible for the Irish legislature.
However it is clear that the right to freedom of expression is not absolute.
It is expressly stated in the Constitution to be subject to public order and
morality. The same must hold true of its correlative right - the right to
silence".
10. It
is perhaps appropriate at this stage to indicate the facts in issue in
Heaney,
supra.
The Plaintiff was arrested under Part IV of the Offences Against the State
Act, 1939. Section 52(1) of the Act empowered a member of An Garda Siochana to
demand of a person arrested under Part IV of the Act
"
A
full account of his movements and actions during any specified period and all
information in his possession in relation to the commission or intended
commission by another person of any offence under any Section or Sections of
this Act or any scheduled offence".
Section
52(2) provides that failure to give the account or information demanded shall
be an offence carrying a sentence not exceeding six months. The Plaintiffs
challenged the constitutionality of
Section 52 on the grounds, inter alia, that
it infringed the constitutionally guaranteed right to silence. Costello J.
held that while the right to silence was protected by Article 38.1, the
provisions of
Section 52 were an appropriate restriction of that right. The
Supreme Court dismissed the appeal of the Plaintiffs against the decision of
Costello J. The Supreme Court as I have indicated declined to reach a
conclusion as to whether
Article
38
was applicable to the case observing that:-
"Nothing
touching the due course of a trial arose as a result of the Plaintiffs failure
to answer, the Court accepts that on occasion what happens prior to trial may
have an adverse impact on the trial".
(at page 584)
11. Accordingly,
while the Supreme Court recognised a right to silence as a correlative right to
the right of freedom of expression contained in the Constitution, it did not
exclude the possibility that compelled evidence of an accused at his trial
might have the protection of Article 38.1 of the Constitution. Both Costello
J. and the Supreme Court accepted that whatever the nature of the right (i.e.
whether founded on Article 38 or
12. Article
40) it was not an absolute right and could, in certain circumstances, be
abridged by the legislature where it passed a test of 'proportionality'.
Costello J. expressed the position thus:-
"The
objective of the impugned provision must be of sufficient importance to warrant
overriding a constitutionally protected right. It must relate to concerns
pressing and substantial in a free and democratic society. The means chosen
must pass a proportionality test. They must:
(a) be
rationally connected to the objective and not be arbitrary, unfair or
based
on irrational considerations
(b) impair
the right as little as possible.
(c) be
such that their effects on rights are proportional to the objective" ....
(at
page 607)
13. In
the Supreme Court, O'Flaherty J. at page 590, adopting the same approach
expressed the view that:-
"The
Court concludes that there is a proper proportionality in the provision between
any infringement of the citizen's right with the entitlement of the State to
protect itself".
14. A
similar approach was adopted by the Supreme Court in
Rock
-v- Ireland
1998
2 ILRM 35
,
when considering the constitutionality of Sections 18 and 19 of the Criminal
Justice Act, 1984. Hamilton C.J., speaking for the Court, said at page 49:-
"The
question to be considered by this Court is whether the restrictions which the
impugned Sections place on the right to silence is any greater than is
necessary to enable the State to fulfil its constitutional obligations".
ABROGATION
OF THE PRIVILEGE AGAINST SELF-INCRIMINATION AT COMMON LAW
15. Lord
Mustill in
R.
-v- The Director of Serious Fraud Office
,
1993 AC 1 observed that
"Statutory
interference with the right (i.e. the privilege against self-incrimination) is
almost as old as the right itself"
.
He said (at page 38):-
"Since
the sixteen century legislation has established an inquisitorial form of
investigation into the dealings and assets of bankrupts which is calculated to
yield potentially incriminating materials and in more recent times there have
been many other examples in widely separated fields which are probably more
numerous than is generally appreciated. These statutes differ widely as to
their aims and methods. In the first place, the ways in which the overriding
of the immunity is conveyed are not the same. Sometimes it is made explicit.
More commonly, it is left to be inferred from general language which contains
no qualification in favour of the immunity. Secondly, there are variations in
the effect on the admissibility of information obtained as a result of the
investigation. A statute occasionally provides in so many terms that the
information may be used in evidence; sometimes it may not be used for certain
purposes, inferentially permitting its use for others, or it may be expressly
prescribed that the evidence is not to be admitted, or again, the statue may be
silent".
16. That
there was a lengthy history of statutory interference with the right against
self-incrimination was accepted by the Supreme Court in
Heaney
-v- Ireland
,
Supra, O'Flaherty J. said at page 587:-
"The
Irish legislative experience is somewhat akin to what has been enacted in
Britain but with the important qualification touching the primacy of the
Constitution which will be considered hereafter a selection but not an
exhaustive list of statutes in diverse areas which required disclosure include
the customs consolidation Act, 1876, the Road Traffic Act, 1961; the Companies
Acts, 1963-1990; the Income Tax Acts and the Finance Acts; the Offences
Against the State (Amendment) Act, 1972; the Criminal Law Act, 1976; the
Criminal Justice Act, 1984; The Bankruptcy Act, 1988; the Criminal Justice
(Forensic Evidence) Act, 1990; the Pensions Act, 1990 and the Social Welfare
(Consolidation) Act, 1993".
17. Having
observed on the differences in substance and objectives between the various
statutes O'Flaherty J. said (at page 588):
"In
the light of the inconsistencies between each it would be idle to engage in
summarising or parsing the various statutes any further; however they each
serve to illustrate that in certain circumstances a person may be required to
disclose information under threat of penal sanction. They invoke a legislative
intent to abrogate to various extents, the right to silence, in a myriad of
contrasting circumstances".
RESTRICTION
ON THE CONSTITUTIONAL RIGHT TO SILENCE
18. As
I have already indicated, the acceptance that the right to silence is an
unenumerated constitutional right requires the Court, when considering the
constitutional validity of legislation restricting such a right, to assess
whether the restriction which the impugned sections place on the right to
silence is any greater than is necessary to enable to State to fulfil its
constitutional obligations.
SAUNDERS
-V- THE UNITED KINGDOM
19. Ernest
Saunders was the Chief Executive Officer of Guinness Plc in 1986 when it was
competing with Argyll Group Plc to take over a third company, Distillers
Company Plc. Allegations of misconduct during the course of the take-over
battle led the Secretary of State for Trade and Industry in the United Kingdom
to appoint Inspectors under Sections 432 and 442 of the English Companies Act,
1985. Saunders was interviewed on nine separate occasions during the year
1987; transcripts of these interviews were given to the police . Saunders was
ultimately charged with offences relating to the illegal share support
operation involved in the take-over of the Distillers Company. The transcripts
were admitted in evidence in the course of his trial and read to the jury over
a period of three days. The Prosecution sought to contradict Mr. Saunders'
oral testimony with the contents of these transcripts. Saunders was convicted
on twelve counts in respect of conspiracy, false accounting and theft. He
received and overall prison sentence of five years. In its Judgment the
European Court of Human Rights (at paragraph 67 of its Judgment) observed on
the investigative functions of the Inspectors appointed under the Companies
Act, 1985:-
"In
this respect the Court recalls in its Judgment in
Fayed
-v- UK
where it held that the functions performed by the Inspectors under Section
432(2) of the Companies Act, 1985 were essentially investigative in nature and
that they did not adjudicate either in form or in substance. Their purpose was
to ascertain and record facts which might subsequently be used as the basis for
action by other competent authorities - prosecuting regulatory, disciplinary or
even legislative. As stated in that case, a requirement that such preliminary
investigations should be subject to the guarantees of a judicial procedure as
set forth in Article 6.1 would in practice unduly hamper the effect of
regulation in the public interest of complex financial and commercial
activities."
20. Article
6.1 of the European Convention on Human Rights in so far as it is relevant
states:-
"In
the determination of .... any criminal charge against him everyone is entitled
to a fair ... hearing ... by an independent and impartial Tribunal".
21. The
Court, however, held that there had been an infringement of Mr. Saunders' right
not to incriminate himself in that transcripts obtained in the non-judicial
investigation were used to incriminate Mr. Saunders in the trial proceedings.
The Court expressly rejected the use of such evidence, obtained under
compulsion, at the trial of Mr. Saunders.
THE
REPRESENTATIVES RESPONDENTS' SUBMISSIONS
22. The
representative Respondents' submissions on the issue relating to
self-incrimination can broadly be summarized as follows:-
(i) This
Court when deciding whether a person is obliged to answer questions put to him
under
Section 10 of the
Companies Act, 1990 must also decide whether (if
required to answer) such answers or their fruits may be used in initiating a
prosecution or at a criminal trial of such a person.
(ii) The
privilege against self-incrimination can only be abrogated by statute or rule
of law where such a statute or rule of law recognises that compelled answers to
questions (and their fruits) are 'sterile' and where the purpose of the
requirement is proportionate to the infringement of the right to silence.
(iii) There
is a constitutional right in a citizen not to be confronted with the dilemma of
"confess and be punished or refuse to confess and be punished".
(iv) There
is a constitutional right not to have compelled testimony used against one at
one's trial.
PART
II OF THE COMPANIES ACT, 1990
Part
II of the
Companies Act, 1990 deals with investigations and provides for the
appointment of Inspectors by the Court for the purposes of carrying out those
investigations.
Section 8 in particular provides for the appointment of
Inspectors on the application of the Minister where the Court is, inter alia,
satisfied that there are circumstances suggesting that the affairs of a company
are being conducted in an unlawful manner or for a fraudulent or unlawful
purpose.
Section 10 imposes an obligation on officers of the company and
others to produce all books and documents of the company under investigation
and to give all assistance to the Inspectors.
"It
shall be the duty of all officers and agents of the company and of all officers
and agents of any other body corporate whose affairs are investigated by virtue
of Section 9 to produce to the Inspectors all books and documents of or
relating to the company or, as the case may be, the other body corporate which
are in their custody or power, to attend before the Inspectors when required so
to do and otherwise to give to the Inspectors all assistance in connection with
the investigation which they are reasonably able to give."
"If
the Inspectors consider that a person other than an Officer or agent of the
company or other body corporate is or may be in possession of any information
concerning its affairs they may require that person to produce to them any
books or documents in his custody or power relating to the company or other
body corporate, to attend before them and otherwise to give them all assistance
in connection with the investigation to which he is reasonably able to give and
it shall be the duty of that person to comply with the requirement."
"An
Inspector may examine on oath either by word of mouth or on written
interrogatories the officers and agents of the company or other body corporate
an any such person as is mentioned in sub-section 2 in relation to its affairs
an may -
(a) administer
an oath accordingly
(b) reduce
the answers of such person to writing and require him to sign
them."
"If
any officer or agent of the company or other body corporate or any such person
as is mentioned in sub-section 2 refuses to produce to the Inspectors any book
or document which it is his duty under this Section so to produce, refuses to
attend before the Inspectors when required so to do or refuses to answer any
question which is put to him by the Inspectors with respect to the affairs of
the company or other body corporate as the case may be, the Inspectors may
certify the refusal under their hand to the Court and the Court may thereupon
enquire into the case and, after hearing any witnesses who may be produced
against or on behalf of the alleged offender and any statement which may be
offered in defence ...."
"...
make any Order or direction it thinks fit including a direction to the person
concerned to attend or re-attend before the Inspector or produce particular
books or documents or answer particular questions put to him by the Inspector
or a direction that the person concerned need not produce a particular book or
document or answer a particular question put to him by the Inspector".
"An
answer given by a person to a question put to him in exercise of the powers
conferred by -
(c) rules
made in respect of the winding up of companies whether by the Court or
voluntarily under Section 68 of the Courts of Justice Act, 1936 as extended by
Section 312 of The Principal Act;
may
be used in evidence against him, and a statement required by Section 224 of the
Principal Act may be used in evidence against any person making or concurring
in making it."
"A
document purporting to be a copy of a report of an Inspector appointed under
the provisions of this part shall be admissible in any civil proceedings as
evidence -
(a) of
the facts set out in without further proof unless the contrary is shown, and
(b) of
the opinion of the Inspector in relation to any matter contained in the report."
"Nothing
in this part shall compel the disclosure by any person of any information which
he would in the opinion of the Court be entitled to refuse to produce on the
grounds of legal professional privilege or authorise the taking of possession
of any document containing such information which is in his possession."
Section
10 obliges directors and others to give all assistance to the Inspector: this
duty clearly embraces answering questions put to them by the Inspector.
Section 18 provides that such answers may be used against the person. The only
entitlement expressly given to a person to refuse to answer a question is where
the answer would disclose information the subject of legal professional
privilege. I am satisfied that I cannot construe
Section 10 of
the Act as
preserving the privilege against self-incrimination: to do so would require a
qualification on the duty imposed by
the Act such that the duty to answer
applied
save
where the giving of such answers would tend to incriminate the witness
.
No such saver appears in
Section 10. It seems to me clear that, had the
Oireachtas intended to save the privilege, it could easily have done so. I am
satisfied therefore that as a matter of statutory interpretation a witness may
not refuse to answer questions on the grounds that his answers might tend to
incriminate him and that
Section 10 has the effect of impliedly abrogating the
right against self-incrimination. I am fortified in this view by the large
number of instances where our Courts have allowed that statutory provisions
have impliedly abrogated the right to self-incrimination. Some of the many
statutory provisions are outlined by O'Flaherty J. in
Heaney
-v- Ireland
,
Supra, at page 587. Cases which have dealt with such statutory provisions are
the
People
(at the suit of the Attorney General) -v- Gilbert
1973 IR 383 (in relation to
Section 107 of the
Road Traffic Act, 1961);
Heaney
-v- Ireland
,
Supra (in relation to
Section 52 of the
Offences Against the State Act, 1939
);
the
D.P.P. -v- McGowan
1979
IR 45 (in relation to
Section 52 of the
Offences Against the State Act, 1939).
Apart from the foregoing Irish cases in which the Courts were concerned with
statutory provisions requiring persons to provide information, there are a
number of English cases where the Courts in that jurisdiction have construed a
statute as not preserving the privilege. In passing, I should note that I have
found no Irish or English authority for the proposition (advanced by the
Respondents) that a valid abrogation at common law requires the sterilisation
of answers to questions or the fruits of those answers. The most relevant
English authority on the question of abrogation of the privilege is the Court
of Appeal decision in
London
United Investments Plc. 1992 2 All England Reports 842
where it was held that a company director or a person possessing relevant
information was not entitled to invoke the common law privilege against
self-incrimination when questioned by Inspectors appointed by the Secretary of
State under Section 432(2) of the Companies Act, 1985 to investigate the
affairs of the Company, since it was clear from the scheme and purpose of Part
XIV of that Act that Inspectors would in many cases be appointed to investigate
where there were circumstances suggesting that there had been fraud in the
conduct or the management of the company's affairs, that Parliament intended
that a person possessing relevant information would be under a duty to comply
with the requirements to answer questions properly put to him by the Inspectors
and that the Inspectors report might lead the Secretary of State to petition
for the winding up of the company or to bring civil proceedings in the
company's name in the public interest. In those circumstances the Court held
that the privilege against self-incrimination had been impliedly removed by
Part XIV of the 1985 Act.
23. Dillon
L.J. said at page 853:-
"On
these provisions I reach without hesitation the conclusion that as:
(i) Inspectors
will in very many cases have been appointed where there are circumstances
suggesting there has been a fraud in the conduct of management of a company's
affairs and
(ii) persons
questioned are bound to answer the Inspectors' questions and
(iii) the
Inspector's report may lead the Secretary of State to petition for the winding
up of the company or to bring civil proceedings in the company's name and the
public interest, the privilege against self-incrimination is impliedly excluded
and is not available to the person being questioned by the Inspectors".
24. While
in my view the words of Section 10, and the other Sections of Part II of the
Companies Act, 1990, make it clear that the legislature intended to abrogate
the privilege against self-incrimination such as might arise during the course
of an Inspector's investigation, and, while both Irish and English authority
suggests that the privilege can be abrogated by statute nonetheless the
Respondents submit that I should go further and examine the legislative history
of the Companies Act, 1990 with a view to construing Section 10 of the 1990
Act. In particular, the Respondents suggest that the Court should use the Dail
debates as an aid in the construction of Section 10(5) of the Act. In
The
People (the Director of Public Prosecutions) -v- McDonagh
1996 1 IR 565, Costello P., sitting as a Judge of the Supreme Court expressed
the view (with which the other members of the Court agreed) at page 570 that:-
"It
seems to me that the Court should have regard to any aspect of the enactment's
legislative history which may be of assistance".
25. Dail
debates are, of course, a record of part of the legislative history of an Act
of the Oireachtas, and it seems clear that I can look at these debates in
construing Section 10 of the 1990 Act. The Respondents point to the Dail
debates for the 14th December, 1988; there the Minister for State at the
Department of Industry and Commerce said at
Column
1514:
"My
main problem with Deputy Cullen's amendment is that it is in direct conflict
with Section 18 which provides that an answer given by a person to a question
put to him by an Inspector may be used in evidence against him. The Section
also appears in corresponding UK legislation and is important to ensure
effective investigation procedures. Without it I do not think we could have
effective investigation procedures. I understand Deputy Bruton's reservations
about this procedure but, now that we have adopted the notion of having it, it
is important that we make it effective.
On
the other hand the idea behind the amendment may be covered in Section 10(5)
which provides that, if a person refuses to answer an Inspector's question, the
Inspector may refer the matter to the Court. Where this happens the Court can
enquire into the case and after hearing evidence for the defence can punish the
person concerned as if he had been guilty of contempt of Court. If a person
persisted in claiming that his refusal to answer a question was based on a fear
that he might incriminate himself the Court would be in a fairly good position
to adjudicate on any such claim under Section 10(5)".
26. This
view as expressed by the Minister, it is urged, assists the Court in concluding
that Section 10, far from abrogating the privilege against self-incrimination,
was providing a forum for its existence. While of course respecting the views
expressed by the Minister it does not appear to me, on a perusal of the debate,
that his contribution to that debate had the effect of indicating a legislative
intention to preserve the privilege against self-incrimination. His
contribution represented Dáil material more evidencing his own personal
view of the effect of Section 10 than material disclosing the legislative
intention behind the section. Having regard to the unambiguous language used
in Part II of the Companies Act, 1990 (which clearly indicates, in my view, a
legislative intention to abrogate the privilege against self-incrimination) I
do not feel it would be safe to rely upon what was said by the Minister at the
Committee stage of the Companies Bill, 1987 as a guide to the legislative
intention behind Part II of the Act.
27. Accordingly,
a consideration of the scheme and purpose of Part II of the 1990 Companies Act,
a consideration of its legislative history and a consideration of the various
Irish and English authorities on the question of the statutory abrogation of
the privilege against self-incrimination lead me to the firm conclusion that
the statute had the effect of abrogating the privilege. It remains, of course,
to be considered whether such an abrogation was constitutionally permissible.
THE
CONSTITUTIONAL QUESTION
28. As
we have seen, the Supreme Court in
Heaney,
supra
,
recognised the constitutional status of the right to silence as a correlative
right to the freedom of expression conferred by Article 40 of the Constitution:
it also accepted that:-
"Just
as the freedom of expression clause in the Constitution is itself qualified so
must the entitlement to remain silent be qualified"
(at page 585)
.
..... [H]owever it is clear that the right to freedom of expression is not
absolute. It is expressly stated in the Constitution to be subject to public
order and morality. The same must hold true of its correlative right the right
to silence"
(at
page 589 per O'Flaherty J. in
Heaney
supra
)
29. The
approach of the Court in determining whether a legislative encroachment upon
the right to silence is constitutionally permissible is one of applying as I
have already indicated a test of proportionality and asking whether the
restriction which the impugned
Sections
place on the right to silence is any greater than necessary to enable the State
to fulfil its constitutional obligations.
30. Part
II of the 1990 Act as stated provides a mechanism for the investigation of
companies by Inspectors. The scheme of the Act allows the appointment of
Inspectors by the Court on the application of the Minister where there are
circumstances which suggest to the Court that the company has been operated in
an unlawful or fraudulent manner. The Inspectors are given investigative
powers including a power to compel answers from officers and other persons. It
is clearly envisaged by the Act that prosecutions can follow. Speaking of the
statutory policy behind the corresponding provisions of the English Act of 1985
Scott
J. said in
London United Investments Plc. 1992 BCLC at page 113/114
:-
"It
is a regrettable feature of commercial and corporate fraud in these modern
times that facilities are available for sophisticated fraudsters to prevent the
trail leading to the unravelling of the fraud from being followed up. The
secrecy provisions of some countries corporate and banking laws operate to this
effect. Nominee shareholdings in offshore companies do so as well. There is
often no alternative if frauds and dishonest stratagems are to be laid bare but
to demand answers from those who are in a position to give them. This, in my
opinion, is at least part of the statutory policy behind Part XIV of the
Companies Act, 1985."
31. It
is, of course, a legitimate objective of the State, and entirely in the public
interest, to lay bare frauds and dishonest stratagems, and where the only means
of effectively achieving such an objective is to provide an investigative
procedure without a right to silence (as in the instant case) then one can
properly assert that the restrictions imposed by Section 10 on the right to
silence are no greater than is necessary to enable the State to fulfil its
constitutional obligations of ensuring equality before the law and of
protecting the property rights of every citizen. Because the abrogation (by
Section 10 of the 1990 Act) of the right to silence is no greater than is
necessary to enable the State to discharge such constitutional duties, Section
10, in my view, is not invalid having regard to the provisions of the
Constitution.
32. The
Respondents assert that there is a constitutional right not to have compelled
testimony used against one at one's trial and that this Court should decide, at
this stage, whether answers compelled under Section 10, or their fruits can be
used in evidence. It is argued that the right asserted is one which flows from
Article 38.1, namely, the right to be tried in due course of law. I do not
believe that in determining that Section 10 abrogates the right to silence, I
should have regard to the use to which such answers are put. The statutory
obligation to answer self-incriminatory questions is not inconsistent with the
right to trial in due course of law. When asked questions by an Inspector, the
witness does not stand as an accused person. If he becomes an accused person,
having answered incriminating questions, his right to a fair trial may not even
at that stage be infringed: it depends on whether the compelled testimony is
tendered against him at his trial; if it is, he may, of course, object to it
and it would be a matter for the trial judge to determine its admissibility.
It is at that stage, and no sooner, that an adjudication on the admissibility
of answers (or the fruits of such answers) is to be made. I therefore see no
necessary connection between the occasion of questioning by an Inspector and
the occasion, at trial, of tendering compelled testimony. No right to a fair
trial is infringed at the questioning stage; the use to which the answers are
put is a separate matter and where such use threatens to, or does, infringe a
constitutional right of the witness that right can be then asserted and
vindicated. That it is appropriate to look at the Inspectors' investigative
and questioning role separately from any subsequent trial finds support in the
decision already referred to of
Saunders
-v- the United Kingdom
,
Supra, where (in relation to the Companies Act, 1985 in the United Kingdom) the
European Court of Human Rights said of the equivalent of Section 10:-
"A
requirement that such preparatory investigation should be subject to the
guarantees of a judicial procedure as set forth in Article 6.1 would in
practice unduly hamper the effective regulation in the public interest of
complex financial and commercial activities".
33. Accordingly
the Court allowed that the privilege against self-incrimination was not
applicable to such preparatory investigations. However, the Court found that
the
use
of such compelled testimony at the trial was indeed a breach of Article 6.1 of
the Convention. Equally, in
Heaney -v- Ireland, supra
,
the Supreme Court upheld the constitutionality of Section 52(1) of the Offences
Against the State Act, 1939 and declined to consider the moot point of whether
information lawfully obtained pursuant to Section 52 could be used in evidence.
The position is no different here: whether or not there is a constitutional
right not to have compelled testimony, or its fruits, used against an accused
is an issue which I do not now have to decide because it has not as yet arisen.
That is a matter which falls to be decided on the occasion when such evidence
is tendered. Accordingly I do not have to consider the implications of the
wording of Section 18 of the 1990 Companies Act.
34. I
propose therefore to answer the first question which is addressed to the Court
in the Motion Paper as follows, namely, that persons (whether natural or legal)
from whom information documents or evidence are sought by the Inspectors in the
course of their investigation under the Companies Act, 1990 are not entitled to
refuse to answer questions put by the Inspectors or to refuse to provide
documents to the Inspectors on the grounds that the answers or documents may
tend to incriminate him, her or it.
PROCEDURES
PROPOSED BY INSPECTORS
35. In
a letter dated the 4th June, 1998 addressed to the solicitors for the
representative Respondent (Messrs. O'Meara Geraghty McCourt) the Inspectors
outlined the procedures they propose to follow. It was a letter in almost
identical terms to the letter they had sent to Messrs. Mason Hayes & Curran
which I have quoted in full at pages 4 and 5 of this judgment.
36. 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
Padraig 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 Inspectors. 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 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 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
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 to the facility of cross-examining any person at this intitial
stage in the process.
37. 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 the 4th June, 1998 (contained
within Exhibit C and D to the Affidavit of John Blayney and Tom Grace sworn on
the
11th
June, 1998) are consistent with the requirements of natural and constitutional
justice.
© 1998 Irish High Court
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