The High Court has dismissed Independent News and Media plc’s judicial review challenge to the Director of Corporate Enforcement’s decision to apply for inspectors to be appointed to the company, ruling that the director was not required to consult the company beforehand.
Mr Justice Noonan delivered judgment on 1 June 2018 after hearing together INM’s application for leave to seek judicial review and its substantive case. He said INM had raised an arguable case sufficient to obtain leave, but dismissed the challenge on its merits.
The director’s application to appoint inspectors under section 748 of the Companies Act 2014 had been brought by notice of motion on 23 March 2018. It was adjourned pending the judicial review. The judgment did not decide whether inspectors should be appointed; that application remained for the court, with INM able to contest it.
The regulatory investigation followed protected disclosures by INM chief executive Robert Pitt. They included allegations concerning pressure over a proposed purchase of Newstalk, a proposed payment connected to the sale of INM’s interest in Australian media company APN, and the removal of company data tapes in 2014 for analysis in the United Kingdom. These were allegations described in the judgment, not findings by Mr Justice Noonan.
During the investigation, the director obtained a spreadsheet which appeared to indicate that searches of the data had targeted 19 people described as “persons of interest”. INM said it had not seen or known of the spreadsheet before the inspector application. The company argued it should have received notice and an opportunity to make submissions, citing alleged harm to its reputation, business and share price, as well as disruption and concern among stakeholders.
The director opposed the challenge, arguing there was no legal duty to give advance notice before bringing court proceedings and that INM could make its case at the hearing of the inspector application.
Mr Justice Noonan relied on Supreme Court authority that bringing legal proceedings does not itself trigger a right to fair procedures. He treated the investigation and the court application as a process whose final decision rested with the court. The application to appoint inspectors could not automatically produce an adverse outcome for INM, he said, and the company would have a full opportunity to be heard before any appointment.
He also rejected the argument that the director’s supporting affidavit amounted to findings of wrongdoing. It contained assertions supporting the application, he said, which were not determinative and remained for the court to accept or reject. The claimed reputational and share-price effects did not establish a legally cognisable harm requiring prior consultation.
The court therefore dismissed the substantive judicial review application. Its ruling addressed the asserted duty to consult before applying; it did not determine the allegations about INM or the merits of appointing inspectors.