By Clara Finn
The Supreme Court has overturned a four-year company disqualification imposed on Patrick Byrne over his conduct as Head of Finance at National Irish Bank during the period examined in the bank inspectors' report.
The High Court had disqualified Byrne in July 2008 from acting as a director, auditor or other company officer, although it allowed him to continue managing his own consultancy company. The Director of Corporate Enforcement had relied on two criticisms made in the inspectors' report concerning Byrne's handling of Deposit Income Retention Tax, or DIRT, issues in 1995.
The first criticism was that, after receiving an internal DIRT audit report and attending a meeting on 9 February 1995, Byrne should have raised the possibility that the bank had a retrospective DIRT liability. The second concerned deficiencies in circulars issued to branches about DIRT compliance.
Ms Justice Denham said the legal threshold for disqualification was substantially higher than that for the less severe remedy of restricting a company director. Disqualification required conduct that was markedly more blameworthy, such as a lack of commercial probity, gross negligence or total incompetence, and its primary purpose was protection of the public rather than punishment.
The Supreme Court noted that dishonesty had never been alleged against Byrne. The High Court had also expressly found no gross negligence, total incompetence or danger to the public.
Denham J held that the High Court fell into error by finding a lack of commercial probity in circumstances where honesty was not in issue. She also stressed that the final inspectors' report did not make Byrne responsible for the accuracy of branch DIRT returns, although it criticised him for failing to raise the potential retrospective liability after the 1995 audit.
The court found that the criticisms, viewed in the context of Byrne's wider professional record, did not make him unfit to manage a company. His appeal was allowed, the disqualification fell away, and the Director's cross-appeal was dismissed.