The Supreme Court dismissed appeals by Michael Bailey and Thomas Bailey and by the Director of Corporate Enforcement in a dispute over evidence filed in proposed company-director disqualification proceedings.
The Director’s application, brought in August 2006 under section 160(2) of the Companies Act 1990, sought to disqualify the Baileys from acting as company directors, among other restrictions. The brothers later asked the High Court to strike out parts of affidavits supporting the application. They succeeded in part, and both sides appealed aspects of that decision. The appeals were heard together.
The judgment delivered by Mr Justice Hardiman on 14 July 2011 records his agreement with the judgment of Ms Justice Denham on the Baileys’ appeal. He also agreed with the order she proposed on the Director’s cross-appeal, giving separate reasons on the Tribunal of Inquiry material and hearsay evidence.
The Director had initially relied on material from the Mahon Tribunal, formerly the Flood Tribunal. Before the appeal hearing, he narrowed his position: he abandoned reliance on substantial parts of that material and argued that specified passages from two interim reports could be admitted as prima facie evidence of the Baileys’ fitness to manage a company.
Justice Hardiman rejected that argument. He said the Supreme Court’s decision in Goodman v Hamilton meant that a tribunal’s findings could not be used as evidence for or against a party in related litigation. The judgment describes tribunal findings as opinions without legal consequences and says they cannot be deployed as a weapon in court proceedings. He also said it would be unfair for the State to change its position after the Baileys had engaged with the tribunal on the understanding that its findings would not have that evidential effect.
The affidavits also referred to two memoranda from the company’s auditor and information obtained from the Revenue Commissioners. Justice Hardiman said the Director could not rely on hearsay in the way proposed, emphasising the Baileys’ right to confront and cross-examine witnesses where allegations were contested. He noted that the Director had not said any particular person had refused to swear an affidavit.
Justice Hardiman considered that clearly inadmissible material could be challenged before trial in the unusual circumstances of this case. He agreed that affidavit evidence supporting alleged wrongdoing must meet the same admissibility requirements as evidence given orally, and found authority for excising the material under Order 40, Rule 4.
The judgment dismissed both the appeal and the cross-appeal. It addressed the admissibility of evidence in the disqualification proceedings; it did not determine the underlying application to disqualify the Baileys.