H531
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High Court of Ireland Decisions |
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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Doyle -v- Bergin [2010] IEHC 531 (09 July 2010) URL: http://www.bailii.org/ie/cases/IEHC/2010/H531.html Cite as: [2010] IEHC 531 |
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Judgment Title: Doyle -v- Bergin Neutral Citation: [2010] IEHC 531 High Court Record Number: 2010 162COS Date of Delivery: 09/07/2012 Court: High Court Composition of Court: Judgment by: Mary Laffoy J. Status of Judgment: Approved |
Neutral Citation 2010 [IEHC] 531 THE HIGH COURT [2010 No. 162 COS] IN THE MATTER OF THE COMPANIES ACTS 1963 - 2009 AND IN THE MATTER OF SECTION 205 OF THE COMPANIES ACT, 1963 AND IN THE MATTER OF SKYTOURS TRAVEL LIMITED BETWEEN MARK EDMOND DOYLE PETITIONER AND
JOHN BERGIN RESPONDENT Judgment of Miss Justice Laffoy delivered on the 9th day of July, 2010. 1. The proceedings and the application The procedural aspects of the matter have advanced since the petition was presented. For present purposes it is sufficient to say that points of claim were delivered on behalf of the petitioner on 17th May, 2010. 1.2 On this application, which was initiated by a notice of motion of 14th June, 2010, the respondent seeks the following orders:
(2) an order "pursuant to the inherent jurisdiction" of the Court redacting all references to private information given by the petitioner to the respondent, the redactions being illustrated by use of a black marker on certain portions of the petition, the grounding affidavit and the points of claim. 1.3 The main thrust of the submissions made on behalf of the respondent at the hearing of the application on 2nd June, 2010 was that redaction and a hearing in camera are necessary to protect a communication from the respondent to the petitioner, who is a lawyer, which the respondent contends is covered by legal professional privilege. 1.4 Accordingly, as I see it, the two issues which fall to be considered on this application are:
(b) whether the proceedings should be heard in camera. 2. Factual background 2.2 The issued share capital of the company comprises 30,000 ordinary shares of €1.20 each, which are fully paid up. The respondent is the owner of 28,420 shares (on the assumption that there is a typographical error in paragraph 3 of the petition) and the petitioner is the owner of the remaining 1,580 shares. In other words, the petitioner owns slightly in excess of 5% of the issued shares and the respondent owns slightly less than 95%. It is clear on the evidence that the company is the respondent's trading vehicle. 2.3 The petitioner is a practising solicitor. In that capacity, he has acted for both the company and the respondent in the past. The petitioner acquired his shareholding in the company in 1990. For present purposes I do not attach significance to the circumstances in which the petitioner acquired his shareholding. 2.4 The petitioner has been a director of the company since 1990. There are three directors of the company: the respondent; the petitioner; and a person who is an employee, but not a shareholder, of the company (the employee director). 2.5 What precipitated these proceedings was the receipt on 8th February, 2010 by the petitioner of an e-mail from the respondent which was accompanied by an e-mail of the same date with an attachment. The attachment was headed "Memo". It was dated 4th February, 2010. It was an internal memorandum from an employee of the accountancy firm which acts as auditors to the company (the company's auditors) to a partner of that firm. The accompanying e-mail was from the partner to the respondent. As a result of the receipt of the e-mail and the accompanying e-mail with the attachment, the petitioner became aware for the first time of the following facts:
During the period from March 1997 to May 2006 I operated two deposit accounts with First Active Building Society, one in the name of Skytours Travel Limited and the other held personally. The details of the transactions for the account in the name of Skytours Travel Limited were not previously included in the financial statements of the company. The source of lodgements to these accounts was rebates from travel companies and some cheques drawn on the current account of Skytours Travel Limited. The lodgements to these deposit accounts ceased in December 2003, and some subsequent rebate cheques received were cashed by me for personal use. I had personal use of these funds which were lodged in each of these accounts until I closed the accounts in May 2006." (c) The aggregate of the undisclosed income which the respondent had appropriated to his own use and of the amount paid by the company to the Revenue Commissioners in settlement of the undisclosed income of the company was just short of €2.4m.
2.7 According to the grounding affidavit, on 11th February, 2010 the respondent and the partner in the company's auditors met the petitioner to talk to him about, inter alia, "the signing off of the accounts" and the contents of the internal memorandum. The evidence of the petitioner is that he was adamant that both the respondent and the partner get independent advice, that it was a very serious matter from his perspective and that whatever advice they got had to include dealing with his position as a director and shareholder. 2.8 In the grounding affidavit the petitioner has averred that on 24th February, 2010 the respondent called a meeting for Friday, 26th February, 2010 "to have the accounts signed off, without first circulating the accounts". The petitioner attended the meeting with his solicitor. The respondent and the employee director were present, but the partner in the company's auditors was not. The petitioner has averred that the respondent informed him that "independent legal advice" had been obtained regarding the issues raised in the internal memorandum, that advice had been obtained "from a tax consultant", and that the accounts could be passed. However, despite his request, the petitioner was not shown any such advices and has never seen them. He refused to sign off on the accounts. The respondent and the employee director signed the accounts. The abridged accounts certified by the respondent and the employee director were filed in the Companies Registration Office (CRO) on 3rd March, 2010 with the annual return (Form B1). 2.9 In his supplemental affidavit sworn in support of this application, which was sworn on 30th June, 2010, the respondent clarified the position he had adopted in the following terms:
3.1 The respondent's legal advisers have applied the black marker liberally to the grounding affidavit. In the grounding affidavit the petitioner has averred to certain matters which arose before 8th February, 2010 in relation to advice, including legal advice, given by the petitioner to the respondent in relation to the company. Contemporaneously with the presentation of the petition, the petitioner brought the usual motion for directions regarding the mode of trial, exchange of pleadings and such like and that motion is still before this Court. It is clear from what has transpired on that motion that both sides recognise that these proceedings will have to be heard on oral evidence. If the petitioner were to attempt to adduce oral evidence on the lines of the evidence contained in the grounding affidavit in relation to the pre-8th February, 2010 matters averred to therein, it would be a matter for the trial Judge to deal with any issue of privilege raised on behalf of the respondent. Having regard to the redaction which the respondent seeks of portions of the petition itself and of the points of claim, in my view, the only issue which arises for determination on this application is whether the e-mail of 8th February, 2010 from the respondent to the plaintiff, and the e-mail of the same date from the partner in the company's auditors to the respondent and the attachment, that is to say, the internal memorandum, give rise to a legitimate claim for privilege in relation to those documents on the part of the respondent. 3.2 The rationale of legal professional privilege was explained by the Supreme Court in Smurfit Paribas Bank Ltd. v. A.A.B. Export Finance Ltd. [1990]1 I.R. 469. Finlay C.J. stated (at p. 477):
It is necessary to bear these general considerations in mind in attempting to ascertain the underlying principle which appears to have led to the expansion of the privilege for communications with a lawyer from cases of actual or contemplated litigation to cases of communications seeking legal advice and/or legal assistance other than advice."
The law, therefore, attaches significant value and accords a high degree of protection to the principle of legal professional privilege. It can, of course, be lost if it is clear that it is being used as a cloak to cover fraud. It may also be overridden by express statutory provision. Waiver is another matter. Clearly a party to an action may waive privilege in express terms. A party may also be held to have waived it impliedly, as when a party does not claim privilege, but includes potentially privileged documents in the non-privileged schedule of an affidavit. Equally, a party waives the privilege attaching to documents passing between himself and his solicitor, when he elects to sue the latter."
(2) where the claim of privilege is challenged, the onus is placed upon the person invoking that privilege to justify it; (3) the correct formulation of that privilege which arises in Irish law, other than in contemplation [or] furtherance of legal proceedings is as follows "... where it is established that a communication was made between a person and his lawyer acting for him as a lawyer for the purpose of obtaining from such lawyer legal advice, whether at the initiation of the client or the lawyer, that communication made on such an occasion should in general be privileged or exempt from disclosure, except with the consent of the client" (per Finlay C.J. at p. 478); (4) what is privileged is the communication. That communication only attracts privilege if it seeks or contains legal advice. The communication of any other information is not privileged in Irish law." 3.5 First, while the petitioner is a lawyer and while he had previously acted as the respondent's lawyer and the company's lawyer, I am not satisfied that the Court should regard the communication from the respondent as a communication to the petitioner acting as a lawyer. The context in which the internal memorandum was prepared was the audit of the company's financial statements for the year ended 31st October, 2009 and the author's concern as to the statutory obligations of the company's auditors in relation to reporting. Aside from any other statutory obligations, the petitioner, in his capacity as a director and, as such, an officer of the company, had statutory obligations in relation to approving the financial statements and filing the annual return and abridged accounts in the CRO. In that capacity, the petitioner was entitled to the information contained in the internal memorandum and, in my view, it is reasonable to infer that that is the capacity in which the communication was sent to him. 3.6 Secondly, while the partner in the company's auditors made it clear that he wished to set up a meeting with the petitioner in order to explore options, it would appear that the options in question were the options of the company's auditors in relation to their reporting obligations of matters in respect of which there were reasonable grounds for believing indictable offences may have been committed by the company or an officer or agent of the company, failure to comply with which could give rise to prosecution for an offence. Those obligations are statutory obligations imposed on the auditors. Presumably, if the auditors considered that they needed legal advice on that matter, they should have obtained their own independent legal advice. In my view, it must be inferred that what they were suggesting was that the respondent in conjunction with his co-director, the petitioner, should consider the matter in the light of the obligations imposed by law on them as officers of the company. 3.7 Thirdly, there is nothing on the face of the communication from the respondent to the petitioner to suggest that the respondent, in his own right, was seeking legal advice and communicating with the petitioner on the basis that the communication would be privileged and exempt from disclosure. Nor is there anything on the face of the communication to suggest that, even if the respondent on his own had authority to bind the company, the communication was a communication on behalf of the company which was seeking legal advice and was to be treated as being privileged or exempt from disclosure. 3.8 It would be absurd if one party to a dispute could unilaterally preclude the other party to the dispute, who happens to be a solicitor, from disclosing a communication in relation to a matter in circumstances where the solicitor party had refused to accept instructions to act or give advice in relation to the matter on the ground that a conflict of interest arose. It is well settled that legal professional privilege is the client's privilege, not the lawyer's privilege. However, the reality of the situation here is that, as regards the matter which was the subject of the internal memorandum, of which the petitioner only became aware when he received thee mail of 8th February, 2010, the petitioner never acted, or agreed to act, in the capacity as lawyer to the respondent or the company. On the contrary, the petitioner made it clear that, because of the conflict of interest involved, he could not so act. In the circumstances, the information which was communicated to the petitioner via the two e-mails of 8th February, 2010 and the attachment, cannot be privileged, in the sense of being exempt from disclosure in legal proceedings, as against the petitioner. 3.9 What the respondent is attempting to do in this case, by reliance on the principle of legal professional privilege, to adopt the terminology used by Fennelly J. in Fyffes plc v. D.C. C. plc. is to use it in s. 205 proceedings "as a cloak" to cover his acknowledged appropriation to his own use of the company's money and effectively nullify the petitioner's cause of action in respect of that action. To allow the respondent to achieve that objective would be to allow legal professional privilege, which Kelly J. in Miley v. Flood (at p. 65) characterised as "a fundamental condition on which the administration of justice as a whole rests", to have the effect of undermining the proper conduct of the administration of justice in the public interest. 3.10 In Murphy v. Kirwan [1993] 3 I.R. 501 the Supreme Court considered the scope of the "fraud" exception to the general rule that communications between a client and his legal adviser are privileged. Having reviewed the case law, Finlay C.J.. stated (at p. 511 ):
4. In camera
3.17 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. 3.18 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." 4.2 Sub-section (7) of s. 205 provides as follows:
4.3 In the later case, Finlay C.J., having quoted from the majority judgments in earlier case, set out the propositions to be deduced therefrom "as principles applicable to an application under s. 205, sub-s. 7" as follows (at p. 194):
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 s. 205, sub-s. 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 s. 205, sub-s. 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, s. 1 of the Constitution, to construes. 205, sub-s. 7 bearing in mind that the entitlement of the Oireachtas pursuant to Article 34, s. 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 s. 205, sub-s. 7 would be:- (a) … (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." 4.5 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. 5. Order |