Court of Appeal: Former CEO of Irish Nationwide loses appeal challenging the legality of inquiry

About this case:

• Judgment:
  dismissed" target="_blank">External link
• Judge:
  Ms Justice Mary C. Irvine

In two judgments from the Court, Ms Justice Finlay Geoghegan dismissed submissions that the trial judge had erroneously adopted a purposive approach to the interpretation of the Central Bank Act 1942, and held that his findings were clearly based on a literal construction in the context of the Act.

Agreeing with Ms Justice Geoghegan, Ms Justice Mary Irvine delivered a supplemental judgment dismissing submissions that the inquiry would not be impartial due to the fact that the former CEO had not been invited to make submissions prior to the settlement between INBS and the Central Bank of Ireland, and that there had been undue delay on the part of the Central Bank.

Background

Irish Nationwide Building Society (INBS) collapsed in the wake of the financial crisis, and in February 2011 all deposits were transferred to Permanent TSB. In. July 2011, all remaining assets and liabilities were transferred to the Irish Bank Resolution Corporation.

In 2010, the Central Bank of Ireland began an investigation of INBS, and of certain members of its management. It’s former Chief Executive Officer, Michael P. Fingleton had retired in April 2009.

As of January 2012, there was correspondence between the Central Bank and Mr Fingleton in relation to suspected prescribed contraventions by INBS during “the review period” of August 2004 to September 2008 for the purposes of s.33AO of the Central Bank Act 1942, and what were termed “reasonable grounds to suspect that as a person concerned in the management of INBS ”, Mr Fingleton may have participated in the commission of the suspected prescribed contraventions within the meaning of s.33AO(2) of the Central Bank Act 1942.

In July 2015, a notice of inquiry was issued by the Central Bank, concerning INBS, Mr Fingleton, and further named individuals. In the notice, it was stated that Mr Fingleton and others had participated in the commission of some or all of the prescribed contraventions by INBS; and that an inquiry would be held. Mr Fingleton was invited to attend the inquiry to commence in February 2016.

Particularly relevant to the second ground of the present appeal; in July 2015, Central Bank published the “Settlement Agreement between the Central Bank of Ireland and Irish Nationwide Building Society”.

High Court

Mr Fingleton submitted that, since he had retired in 2009, he was no longer concerned in the management of INBS on the date of the service of the notice of inquiry; and that further, INBS was no longer a financial services provider. He contended that under s.33AO(2), a “person concerned in the management of a regulated financial service provider” did not include persons who were no longer concerned with such management, and hence the Central Bank had no jurisdiction to inquire into Mr Fingleton in 2015.

In January 2016, the High Court refused to grant an order of certiorari of a notice of inquiry served by the Central Bank of Ireland, pursuant to part IIIC of the Central Bank Act 1942 as amended.

Justice Noonan said that it was “clear beyond doubt” that the time at which the person concerned in the management of a regulated financial service provider must be concerned at the time of the prescribed contravention, and that any other construction offended common sense and would lead to absurd results.

Court of Appeal

Mr Fingleton pursued his appeal on three distinct grounds:

Mr Fingleton submitted that in adopting a purposive approach to the interpretation of s.33AO(2) of the Central Bank Act 1942, that the trial judge was in error. Mr Fingleton said that, since the section had to be interpreted in accordance with principles applicable to one that imposes a penal sanction, that the trial judge erred in essentially applying s.5 of the Interpretation Act 2005 – which does not apply to a penal sanction.

Considering DPP v Hegarty 4 IR 635, and DPP v Boyce 2 IR 124; Justice Geoghegan concluded that the trial judge did not err in principle in his approach to interpretation, that he gave a literal construction in the context of the Act, and emphasised that he phrase was time neutral. Agreeing with the trial judge, Justice Geoghegan said it was quite clear that the time when the alleged prescribed contravention occurred was what the description related to.

Considering the latter two grounds, Justice Irvine rejected Mr Fingleton’s submission that he would not obtain an impartial hearing at the inquiry due to the fact that he was not invited to make submissions prior to the settlement. Justice Irvine said that Mr Fingleton had no right to be so heard or consulted, that he had not provided any evidence regarding what he would have submitted in such a hearing, that he “conveniently sidestepped” how this would affect the outcome of the inquiry, and that Dellway Investments Ltd . National Asset Management Agency 4 I.R. 1 was of no assistance to him.

Finally, Justice Irvine was in agreement with the trial judge that there had been no undue delay by the Central Bank.

The three-judge Court of Appeal agreed that the entire appeal should be dismissed.