By Ciaran Vale
The Supreme Court has set aside Law Society decisions arising from an investigation into solicitor Giles J. Kennedy's practice after finding that the investigating accountant had been appointed partly for a purpose not authorised by the Solicitors' Accounts Regulations 1984.
The ruling follows an earlier Supreme Court judgment delivered in April 2001. The court had already held that an accountant appointed under the accounts regulations could investigate compliance with those regulations, but could not use that power to investigate suspected fraudulent personal injury claims.
The evidence showed that accountant Aisling Foley had been instructed to conduct what the High Court described as a two-pronged investigation: examining Kennedy's accounts while also looking for evidence that his practice was processing bogus claims. About half of the investigative work related to each strand.
Mr Justice Fennelly said it was not necessary to establish that the unauthorised purpose was the dominant motive. Where a statutory power was deliberately exercised for both a permitted and an impermissible purpose, and the latter materially influenced the decision, the exercise of power was ultra vires.
The court was particularly critical of the Law Society's concealment of the second purpose. Kennedy had raised concerns about a “hidden agenda”, but the Society did not disclose that fraudulent claims were being investigated. The court held that the appointment could not be saved by separating its lawful and unlawful purposes because it was a single decision in which both objectives were integral.
The appointment of the accountant was therefore set aside. The court also held that the Compensation Fund Committee's February 1996 decision to refer Kennedy to the disciplinary tribunal, having considered the full report, should be quashed.
However, the ruling does not prevent the Law Society from making a fresh decision using evidence that could properly have been gathered under its lawful powers. It may not rely on material concerning the processing of allegedly spurious claims obtained through the unauthorised investigation. Any claim by Kennedy for damages was left to the High Court, with the Supreme Court expressly stating that invalidity alone did not establish an entitlement to compensation.