Sunlight is the best disinfectant: open justice and company law proceedings in Ireland – Eoin O’Dell

26 05 2012

SkyToursHot on the heels of McKillen v Misland (Cyprus) Investments Limited [2012] EWHC 1158 (Ch) (26 April 2012), about which I blogged in my previous post, the ever-wonderful Stare Decisis Hibernia blog draws attention to a 2010 open justice case in the Irish High Court. In In re Skytours Travel Ltd, Doyle v Bergin [2010] IEHC 531 (9 July 201o) Laffoy J refused to hear a dispute between shareholders in camera.

Section 205 of the Companies Act, 1963 (also here) allows a shareholder who complains that the affairs of the company are being conducted in an oppressive manner to apply to the court for a remedy, and subsection (7) allows the court to hear such an application in camera. In particular, section 205(7) provides:

If, in the opinion of the court, the hearing of proceedings under this section would involve the disclosure of information the publication of which would be seriously prejudicial to the legitimate interests of the company, the court may order that the hearing of the proceedings or any part thereof shall be in camera.

Article 34.1 of the Constitution provides that

Justice shall be administered in courts established by law by judges appointed in the manner provided by this Constitution, and, save in such special and limited cases as may be prescribed by law, shall be administered in public.

As a consequence, the Courts have held that, in the absence of statutory authority or constitutional requirement, the press can neither be excluded from an otherwise open hearing (Irish Times v Ireland [1998] 1 IR 359, [1998] 2 ILRM 161; De Gortari v Smithwick [1999] 4 IR 223, [2000] 1 ILRM 463, [1999] IESC 51 (25 June 1999)) nor be precluded from publishing information from that hearing such as the name of an accused (Independent Newspapers v Anderson [2006] 3 IR 341, [2006] IEHC 62 (15 February 2006)).

Similarly, in the absence of statutory authority or constitutional requirement, the Courts cannot permit a party to conduct litigation anonymously (Roe v The Blood Transfusion Service Board [1996] 3 IR 67 (Laffoy J); Re Ansbacher (Cayman) Limited [2002] 2 IR 517, [2002] IEHC 27 (24 April 2002); Doe v The Revenue Commissioners [2008] 3 IR 328, [2008] 2 ILRM 114, [2008] IEHC 5 (18 January 2008); McKeogh v Doe [2012] IEHC 95 (26 Jan 2012)).

In this respect, Clarke J in Doe v The Revenue Commissioners derived three principles:

Firstly, the obligation that justice, save in special and limited circumstances, be administered in public includes an obligation that all parts of the court process be available to the public. That means that the identity of the parties to proceedings, amongst other things, must, prima facie, be made public. …

Secondly, in the absence of an express statutory provision permitting either that all (or the appropriate part) of a relevant proceeding be heard otherwise than in public or prohibiting the publication of the identity of parties to the relevant proceedings, the only circumstances in which it has been established that a court may restrain a full publication of all that transpired during a court hearing (including the names of the parties) is where the restrictive court order concerned is necessary to prevent a real risk of an unfair trial, and where the damage which would result from not making the order concerned would not be capable of being remedied by appropriate directions to a jury or otherwise.

Thirdly, it seems clear that parties are not entitled to call in aid the undoubted constitutional right to a good name or to privacy, as a countervailing factor to the constitutional imperative that justice be administered in public. It is only where there is no other means of achieving the undoubted entitlement of parties to a just determination of their proceedings, that it has been established that a court has a constitutional entitlement to interfere with the obligation that justice be fully administered in public, and even then the court is constrained to interfere as little as possible with that imperative.

Moreover, even where there is statutory authority or constitutional requirement, any exception to the principle of open justice has to be necessary in the interests of justice and given a very narrow compass. Hence, even though section 205(7) permits a court to make an in camera order, in In re R [1989] IR 126, the Supreme Court unanimously emphasised that such order would only pass constitutional muster if a public hearing would obstruct impede the doing of justice as between the parties. However, the Court divided on the application of the principle to the facts. Walsh J for the majority directed that the proceedings should be heard in public, whereas Finlay CJ for the minority was prepared to accept certain restrictions in the circumstances of the case. The principles in In re R were applied in Irish Press v Ingersoll [1994] 1 IR 176, [1993] ILRM 747, where Finlay CJ for a unanimous Supreme Court held that the parties had not discharged the “admittedly heavy” onus of proof to displace the constitutional commitment to open justice, and he set out the considerations a judge facing a s205(7) application must bear in mind:

1. The court cannot even commence to exercise a discretion under s205(7) unless it is of opinion that the hearing of the proceedings or of some particular part of the proceedings would involve the disclosure of information the publication of which would be seriously prejudicial to the legitimate interests of the company.

2. If it is of opinion that such a situation exists, the court may then enter upon an investigation as to whether it should exercise its discretion under s205(7) to hold the case in camera. In so doing, it will, however, be involved in considering a fundamental constitutional right vested in the public, namely, the administration of justice in public, and it cannot,therefore, make an order under s205(7) merely on the consent of all the parties concerned in the petition before it.

3. The additional matter which a court would have to be satisfied of in order to direct a hearing of the whole or part of the petition otherwise than in public would be that a public hearing of the whole or of that part of the proceedings would prevent justice being done.

4. In reaching a conclusion as to whether this test has been satisfied in any particular case, it would be appropriate for the court, having regard to the terms of the provisions of Article 34.1 of the Constitution, to construe s205(7) bearing in mind that the entitlement of the Oireachtas pursuant to Article 34.1 to prescribe by law for the administration of justice otherwise than in public, is confined to special and limited cases.

5. It would appear to me to be probable that in most instances, at least, a successful application for a hearing in camera pursuant to s205(7) would be:

(a) where the party seeking an in camera hearing is the petitioner, by establishing to the satisfaction of the court that by reason of the making known to the public of information concerning the company involved that notwithstanding the very wide and varied jurisdiction which by virtue of s205(3) the court would have to redress the wrong inflicted upon the petitioner by oppression, if that was proved, that by reason of the extent of the damage to the asset consisting of the petitioner’s shareholding in the company concerned, the court was incapable by reason only of the publication of the proceedings or some part thereof to render a just remedy to the wronged petitioner, or

(b) where the party seeking an in camera hearing is the respondent, by establishing to the satisfaction of the court that, by reason of the making known to the public of information concerning the company involved in the course of the hearing of the petition, even if the petition were to be dismissed by the court and the respondent awarded costs against the unsuccessful petitioner, that by reason of the extent of the damage to the asset consisting of the respondent’s shareholding in the company concerned, or if the company were the respondent by reason of the damage to its value, that the court would, merely by dismissing the petition with costs, be incapable, by reason only of the publication of the proceedings, of rendering a just remedy to the wrongfully sued respondent, or

(c) by proving that either the petitioner to further his claim or the respondent to defend himself against the claim of the petitioner, in reasonable prudent protection of the asset which he owned, consisting of his shareholding in the company, would be obliged to abstain from tendering evidence which would probably influence the resolution of the issues and the achieving of a just result by the court, by reason of the fact that the publication of it would do such damage, (irrespective of the result of the case and the remedy which he might obtain from the court) to the asset consisting of his shareholding so as to outweigh the advantage of succeeding in the petition.

In Skytours, the petitioner sought the usual s205 relief of an order that either the respondent or the company be compelled to purchase his shares. The respondent sought to have certain correspondence redacted on the grounds of legal professional privilege, and to have the hearing held in camera. Both applications failed. As to the first, no privilege arose on the facts; and, even if one did, the interests of justice required that it be precluded (Smurfit Paribas Bank Ltd v AAB Export Finance Ltd [1990] 1 IR 469 (SC); Murphy v Kirwan [1993] 3 IR 501 (SC); Miley v Flood [2001] 1 ILRM 489, [2001] 2 IR 50, [2001] IEHC 9 (24 January 2001); Fyffes v DCC [2005] 1 IR 59 (SC), [2005] IESC 3 (27 January 2005) applied). As to the in camera application, Laffoy J referred to Clarke J’s judgment in Doe v Revenue Commissioners and held

the Court has no jurisdiction to hear these civil proceedings otherwise than in public. In particular, one could not conclude that there are not other means of achieving the entitlement of the parties to a just determination of the proceedings than to hear the proceedings in camera.

She then considered Finlay CJ’s judgment in Irish Press v Ingersoll, and held

to use a sporting metaphor, the respondent does not even get to first base. The information which the respondent seeks to suppress is that he has acknowledged that he appropriated monies belonging to the company to his own use and that, following on a Revenue audit, he made a voluntary disclosure to the Revenue that the company had not included those monies in the financial statements and had not returned the income for taxation purposes, and further that during its accounting year ended on 31st October, 2009 the company rectified the situation by discharging the unpaid tax together with interest and penalties. In my view, it is impossible to conclude that the publication of the disclosure of that information in proceedings heard in open court would be seriously prejudicial to the legitimate interests of the company. As the condition precedent to the Court embarking on a consideration of the exercise of the discretion conferred by s205(7) has not been satisfied, the Court is barred from exercising that discretion.

Aside from the fact that the condition precedent has not been complied with, it is impossible to conclude that hearing these proceedings in public would prevent justice being done or perpetrate an injustice on the respondent, if he is successful in defending the petition.

As with the application in McKillen, it is unsurprising that the respondent’s application here failed. The Skytours website offers a wide range of sun holidays. As the dispute between its shareholders demonstrates, sunlight is the best disinfectant (Louis Brandeis, Other People’s Money, and How the Bankers Use (1914) chapter 5). The kinds of matters which the respondent sought to keep out of the public domain are exactly the kinds of things that publicity will disinfect.

This post originally appeared on the Cearta.ie blog and is reproduced with permission and thanks


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28 05 2012
Law and Media Round Up – 28 May 2012 « Inforrm's Blog

[...] Sunlight is the best disinfectant: open justice and company law proceedings in Ireland – Eoin O’… [...]

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