The High Court has excluded specified evidence from affidavits in the Director of Corporate Enforcement’s disqualification proceedings against Michael Bailey and Thomas Bailey, while ruling that a District Court production order was invalidly obtained.
The judgment, delivered by Ms Justice Irvine on 1 November 2007, concerned an application by the respondents to remove material from the evidence supporting the Director’s case. It did not decide whether either respondent should be disqualified as a company director.
The court ruled that references to findings in a Tribunal of Inquiry report, documents from the Revenue Commissioners and two handwritten memoranda by an accountant should be removed from the grounding affidavits. It said the material included hearsay and opinions whose authors had not provided evidence that could be tested by the respondents. The court held the application was not premature and that objections to the affidavit evidence should be dealt with at this stage.
The court allowed the applicant to rely on an auditors’ H4 notice concerning Bovale Developments Limited’s books of account for the financial years ending 30 June 1997 and 30 June 1998. It also rejected the respondents’ challenge to the Director’s use of PricewaterhouseCoopers (PwC) to assist with the investigation, finding that the firm had lawfully acted as an officer assisting the Director in carrying out his functions.
On the production order, the court found that the application to the District Court was based on an investigation into alleged fraudulent trading, while the statutory power relied on was limited to specified investigations concerning drug trafficking, money laundering or potential confiscation. The judge concluded that the order of 22 November 2002 was not validly obtained.
The parties had agreed that the court would not decide at this stage what consequences, if any, flowed from that ruling for the disqualification proceedings. The judgment’s formal conclusion directed the removal of paragraphs 9, 10, 13, 17, 27 and 28 of the Director’s officer’s affidavit, and the part of paragraph 32 referring to the Tribunal report. It did not order removal of paragraph 8 of the PwC partner’s affidavit.