JUDGMENT of Mr. Justice Hardiman delivered the 14th day of July, 2011.
This case features an application, brought by Notice of Motion dated the 8th August, 2006, seeking a disqualification order pursuant to the Companies Act, 1990 against Michael Bailey and Thomas Bailey, which would preclude them inter alia from acting as Directors of a company. The grounds of this application were set out in affidavits sworn by Peter Lacey, a partner in PricewaterhouseCoopers and by Dermot Madden, an accountant in the office of the Director of Corporate Enforcement.
The applicants brought a Notice of Motion dated the 22nd November, 2006, seeking an order striking out various paragraphs of the said affidavits and were in part successful in this in the High Court. The Baileys’ appealed this order which refused them relief on eight specific grounds, set out in the judgment of Denham J. in the present case and the Director of Corporate Enforcement filed a Notice of Cross-Appeal on the grounds also set out in the judgment of Denham J. The two appeals were heard together.
In relation to the contentions raised in the Baileys’ appeal, I am in agreement with the judgment of Denham J. and need say no more about it. I am also in agreement with the order proposed by Denham J. in relation to the Cross-Appeal but I desire to give my own reasons for this.
The Tribunal Issue.
The Director of Corporate Enforcement appealed, inter alia, those parts of the judgment of the High Court which ruled that:
The Baileys were the subject of serious allegations made against them before a Tribunal of Inquiry, namely the Mahon Tribunal formerly the Flood Tribunal. Certain of the findings of the Tribunal were set out or summarised in the Affidavits filed in the disqualification proceedings, and the Baileys took exception to this. This objection is based very largely on the characterisation of the Tribunal of Inquiry as a legal entity contained in the judgments in the High Court and in this Court in the leading case of Goodman International and Lawrence Goodman v. The Honourable Mr. Justice Liam Hamilton, Ireland and the Attorney General [1992] 2 IR 542.
Significance of Goodman.
I wish to repeat what I said in the course of my judgment in Murphy and Ors. v. Flood (Supreme Court, unreported 21st April, 2010) in relation to the context and significance of Goodman:
“… certain persons have in the past been heard to complain, and to take their complaint to the courts, that the enormous prerogatives of a Tribunal of Inquiry is capable of destroying them, financially and in terms of reputation, much more obviously than even a criminal court could do, but that the tribunal’s procedures afford them few or none of the protections which would be available to them in the court forum. This contention has always been rejected. It was rejected in strong terms by this Court in Goodman v. Hamilton. This decision is now the foundation, in Irish law, of the constitutionality of the Tribunal of Inquiry, as known in our law. But since that judgment was given, the nature of tribunals in themselves has been altered by legislation, by parliamentary resolution… and by the exponential, and wholly unpredicted, expansion in the length of Tribunals of Inquiry and in the costs of them. It would be wholly unrealistic not to acknowledge that these costs can only be described as truly enormous”. (Emphasis added)
I also said, and also wish to reiterate, from my judgment in the Murphy case the following:
“Goodman is a decision of this Court, a case of high authority which we have not been asked to disapprove and which I propose to follow. It is true to say that Mr. Michael Collins S.C. who appeared for the Tribunal on this appeal said he would ask the Court “if necessary” to depart from Goodman. I take it however, that this is a reference solely to the dictum of McCarthy J. to be discussed below and not to the principal thrust of Goodman, which has been for almost twenty years every Tribunal of Inquiry’s title to constitutionality. No argument was directed against any finding in Goodman except the dictum of McCarthy J. Nevertheless, it must be acknowledged that, in distinguishing the findings of a tribunal from the verdict of a court, the judges were obliged to make some rather subtle distinctions which one may take leave to doubt would count for much in the minds of ordinary people. I have to some extent explored this topic in my judgment in Maguire v. Ardagh [2002] 1 IR 385 at 669”.
Despite these acknowledgments of the canonical status of Goodman, it must equally be recorded that this is the second attempt in just over a year, Murphy being the first, to gloss, or to relegate to the status of mere obiter, or if necessary to overrule a portion at least of the findings of Goodman. In the Murphy case, this portion was a dictum of McCarthy J. in relation to the Tribunal’s powers to award costs. In the present case it is a portion of the judgment of Finlay C.J., to be considered below.
In Goodman, the former Chief Justice said at p.590:
“With regard to the suggestion that the findings of the Tribunal if not an impermissible administration of justice by a body other than a court, is a usurpation of the activities of courts in cases where either civil cases are pending or may be instituted, it seems to me that again this submission arises from a total misunderstanding of the function of the Tribunal. A finding by this Tribunal, either of the truth or of the falsity of any particular allegation which may be the subject matter of existing or potential litigation, forms no part of the material which a court which has to decide that litigation could rely upon. It cannot either be used as a weapon of attack or defence by a litigant who in relation to the same matter is disputing with another party rights arising from some allegation of breach of contract or illegal conduct or malpractice. I am, therefore, satisfied that the submission under Article 34 must fail”. (Emphasis added)
The Director of Corporate Enforcement says that in so holding, especially in the emphasised passage, Finlay C.J. went further than was necessary. He said that the passage was obiter on the basis that it was not necessary to go that far to decide the case. He said it was not necessary to overrule the judgment as a whole but it should be distinguished on the basis that it is not sought here to usurp the Court’s functions.
What the Director wishes to do.
The Director of Corporate Enforcement first relied on the Tribunal material referred to in the affidavits filed on his behalf in general support of his application to disqualify the Baileys. Subsequent to the High Court decision, and just before the hearing of this appeal, by letter of the 24th March, 2011, the Director informed the Court that he was restricting the ambit of his cross-appeal in a particular way. Essentially, the Director informed the Court that he was no longer seeking to rely at all on substantial parts of the Tribunal material referred to in his affidavits and that in relation to other parts (being paragraph 18.09 of the Second Interim Report of the Tribunal) and paragraphs 7.08 and 7.09 of the Third Interim Report of the Tribunal, he appears to limit his contention to the proposition that this material is relevant to the Court’s determination of the fitness of the applicants’ to be concerned in the management of a company on the basis that it should be admitted as prima facie evidence in the disqualification proceedings.
This, it will be observed, is a considerable restriction of the scope of the Director of Corporate Enforcements contentions and clearly represents a significant rethinking of the Director’s position. But that position is still an extremely novel and far reaching one. At least absent a specific statutory provision, a matter of fact requiring to be established before a court must be established by admissible evidence which is open to cross-examination and contradiction, and is given publicly before the Court. It is not normally an admissible form of proof to produce a statement by a third party whether a policeman, a government minister or a Tribunal of Inquiry and to claim that that has evidential effect, prima facie or otherwise. An exception to this arises, of course, where there is an issue which, by virtue of a decision of a court of competent jurisdiction, is res judicata between the parties; but such a decision of a court will itself have been reached on admissible evidence duly adduced in a hearing which observes all the parties’ procedural rights.
Powers of a Tribunal of Inquiry.
It has frequently been observed, specifically in the Murphy case cited above and in O’Callaghan v. Mahon [2008] 2 IR 514, that the power of the modern Tribunal of Inquiry is truly awesome. The duration of some modern tribunals is nothing less than appalling: a recent tribunal has ended after about thirteen years and another seems likely to exceed even this enormous total. As a result, the expense of the participation in a tribunal of inquiry is nothing less than grotesque, beyond the means even of individuals or corporations who would normally be considered rich. Furthermore, Tribunals have now taken to sitting for very long periods in private so that the material which they gather is normally known only to themselves, except on these all too frequent occasions when portion of the material is leaked. This accumulation of material in secret has on a number of occasions created major injustice where material damaging to the account of an accusing witness has been quite deliberately withheld from the parties whom he accuses: see Murphy and O’Callaghan. I will not expand further on the characteristics, enormous expense and dramatic effects of tribunals since they have already been amply discussed by me in the cases mentioned and in Maguire v. Ardagh [2002] 1 IR 385.
Legal issues affecting Tribunals.
Because of the matters just mentioned the Tribunal of Inquiry, especially in its modern form, has frequently been the subject of legal challenges by individuals and even by the government itself. These aspects do indeed give rise to very serious legal and constitutional issues. By reason of the provisions of the Constitution, justice is to be administered by judges in public, in Courts established under the Constitution. But a simulacrum of the administration of justice often appears to take place in tribunals and people are prejudiced by the findings of tribunals at least as much as by the judgment of a court. There is manifest scope for conflict between a tribunal and the constitutional rights of the citizens especially in relation to the administration of justice, civil or criminal, and the trial of offences.
The learned editors of Kelly on the Irish Constitution (4th edition, Dublin 2003) at p.1040 say:
“Article 38.1 is plainly referable to the trial of offences, but the novel question of whether the Oireachtas is free to establish parallel procedures providing for the investigation of alleged criminal (or potentially criminal) conduct was examined by the Supreme Court in Goodman v. Hamilton”. (Emphasis added)
That, indeed, is the essence of the challenge mounted in Goodman. In that case Mr. Seamus McKenna S.C., leading counsel for Mr. Goodman, had previously put the issue in much the same way:
“The issue of the right of the Tribunal to investigate the truth or otherwise of allegations of criminal conduct or illegal activities, or fraud, is the core and fundamental constitutional question in this case”.
Against the background of this very powerful attack, the decisions of the High Court and of this Court in Goodman preserved the constitutionality of the Tribunal of Inquiry, but only by characterising and defining the legal nature of a tribunal in a very specific way. The details of this will shortly be discussed. The fundamental flaw in the argument that the passage cited above from the judgment of Finlay C.J. is obiter, because it goes further than is necessary, is that the argument fails to appreciate that the passage in question is a clear, obvious and unavoidable corollary of the characterisation of the legal nature of a tribunal whereby alone the constitutionality of the institution was preserved.
The core of the challenged passage.
There is no doubt that the core of the passage from Finlay C.J. to which the Director of Corporate Enforcement objects is the statement that:
“[the finding of a tribunal] either of the truth or the falsity of any particular allegation which may be the subject of existing or potential litigation, forms no part of the material which a court which has to decide that litigation could rely upon. It cannot either be used as a weapon of attack or defence by a litigant who in relation to the same matter is disputing with another party rights arising from some allegation of breach of contract or illegal conduct or malpractice”.
It is that passage, quite specifically, which prevents the deployment of the Tribunal’s findings as a weapon of attack in the hands of any litigant, here the Director of Corporate Enforcement.
Legal nature of a tribunal.
In the words, not of Finlay C.J. but of Costello J. (as he then was) who gave the judgment of the High Court in Goodman, the finding of a Tribunal of Inquiry is:
- not imposing any liabilities or effecting any rights (p.557),
- its conclusions merely have the status of opinion and “this opinion is devoid of legal consequences” (p.557),
- a body whose findings are “sterile of legal effect” 562 and
- whose purpose is “merely to enquire and report” (ibid).
Elsewhere it is found that the function of a tribunal of inquiry is:
“To make a finding of fact, in effect, in vacuo and to report it to the legislature (590)”.
The dangers and conceptual difficulties to which a tribunal which lacked these characteristics would give rise are amply considered in an Australian case referred to by several of the judges, in Goodman, viz: Victoria v. Australian Building Construction Employees Federation (1982) 152 CLR 25. I wish to emphasise my agreement with the whole of the citation from the judgment of Murphy J. in that case, which is set out in the judgment of Hederman J. in Goodman. He said, in particular:
“The authority given to the Commissioner to exercise such an important ingredient of judicial power as finding a person guilty of ordinary crimes, is itself an undermining of the separation of powers. It is a fine point to answer that the finding is not binding and does not of itself make the person liable to punitive consequences. It is by fine points such as these that human freedom is whittled away”.
I conclude, accordingly, that the decisions in Goodman provide the only conceivable basis on which the constitutionality of a tribunal of inquiry could be preserved. All the constitutional guarantees in relation to the administration of justice and fair procedures would be vain if it were possible for the government to set up simulacrum or a “parallel process” which would have all the consequences of criminal conviction other than actual imprisonment.
I repeat that the passage from the judgment of Finlay C.J. to which exception is taken is in my view entirely unexceptionable. So far from going further than is necessary, so as to be a mere obiter, the entire of the passage is, as I have said, the inescapable corollary of the findings that a tribunal operates “in vacuo” that it is “sterile of legal effect” and that its report is simply an opinion and is “devoid of legal consequences”. If the report could be used, on a prima facie basis or otherwise, as a weapon or a shield in the hands of a litigant it would manifestly not be “devoid of legal consequences” or “sterile of legal effect”.
Whether a body which is so “sterile” is worth having in the first place is a question for the judgement of those who establish tribunals, and not for the Court. But once established it is established with those qualities, and not otherwise.
It is worthy of note that the Attorney General did not support the contention of the Director of Corporate Enforcement but supported, as I understood it, the “sterility” of the Tribunal’s findings. Though the findings in this case were adverse to the Baileys, the report of any particular tribunal might be adverse to any party at all, or even to the State itself. In such circumstances the State would be entitled to take the point now taken by the Baileys, and to the same extent, neither greater nor less.
Ex post facto
There is another point which in my view is absolutely fatal to the contentions of the Director of Corporate Enforcement in the present case. Through all the long years of the Baileys involuntary interactions with this Tribunal of Inquiry, as a result of which they incurred expense which would have crippled poorer men, they did so on the basis that the nature of a tribunal of inquiry was that set out in Goodman, a decision of the country’s Court of Final Appeal, unchallenged throughout their very prolonged appearances before the Tribunal.
In those circumstances it is simply not open, in my view, to the State or any emanation of the State to execute a complete change of front and declare that now, so far from being “devoid of legal consequence” or “sterile of legal effect” the findings of the Tribunal are prima facie evidence against them in the present disqualification proceedings in which serious allegations are made against them.
It is not open to a party, and particularly a party in a dominant position such as the State, to “approbate and reprobate”, as the old phrase, originating in a different context, has it. I take this to mean, in more contemporary language, the State cannot bring about or permit a particular state of the law and then, without notice, to take up an entirely different posture and to seek to deprive a person of property or other advantage acquired under that state of the law by declaring that it never existed at all, or was it wrong, or mistaken, or by changing it in a manner inimical to a course of conduct lawfully and prudently followed under the law as it stood. This is certainly the case in relation to property rights. In Cox v. Ireland [1992] 2 IR 503, the plaintiff challenged the provision of an act of 1939 whereby, as a public servant, he could on conviction of a scheduled offence in the Special Criminal Court forfeit his employment, be disqualified from the like employment for seven years and be disqualified from being granted out of the central fund any pension, superannuation or allowance in respect of service rendered by him before the date of such conviction. In finding the Section unconstitutional, this Court held that:
“It is clear that the provisions of s.34 of the Act of 1939, when it becomes applicable to any person convicted of a scheduled offence in a Special Criminal Court, potentially constitutes an attack, firstly on the unenumerated constitutional right of that person to earn a living and, secondly, on certain property rights protected by the Constitution, such as the right to a pension gratuity or other emolument already earned, or the right to the advantages of a subsisting contract of employment… the unilateral variation and suspension of contractual rights, including rights which may involve the entitlement to a pension to which contribution over a period has been made, constitutes a major invasion of those particular property rights”.
I respectfully agree with the foregoing and see no reason why the prohibition against tampering with entitlements previously available should be confined to rights in the nature of property rights. Indeed, as can be seen, the judgment of the Supreme Court in Cox also extended to an unenumerated rights such as the right to earn a living. To be disqualified from being a Director or participating in the management of a company plainly tranches on such a right especially in relation to people who have been Company Directors for a lengthy period. That is not to say that they may not lose such a right: obviously they can. But it is emphatically to say that they cannot lose such a right on the basis wholly or partly of “evidence”, prima facie or otherwise, which they had previously been entitled to believe would not be available as evidence against them, and would be “devoid of legal consequences, sterile of legal effect”.
The hearsay issue.
The Director of Corporate Enforcements also wanted to rely in evidence on two different types of material which were undoubtedly in the nature of hearsay. These were, firstly, two memoranda from the Company’s auditor and secondly, information which he had obtained from the Revenue Commissioners. He did this largely on the basis of various English authorities which are referred to in the judgment of Denham J. to the effect that hearsay evidence should be admissible in the disqualification procedures “in the initial stages of the application”.
The point is well taken by Denham J. that the material in the English cases was all material arising out of statutory proceedings and fitting into a statutory scheme. In Secretary of State v. Aaron [2008] EWCA 1146, Thomas L.J. stated, having referred to earlier authority:
“… the whole basis for the rationalisation in the cases is the statutory scheme. I cannot see any reason to hold that anything relied on by the Secretary of State is admissible in disqualification proceedings; the rationale for relying on the reports and other material fits into the statutory scheme, but there is nothing to suggest that the Secretary of State can go outside this scheme. If he could, it would be difficult to see what limits there could be to the materials to be relied upon. There is also good sense in restricting the material relied upon to material produced through the statutory scheme for investigation; this is understood by everyone and the procedure clear”.
It is, therefore, quite clear that the United Kingdom cases depend entirely on the existence of a statutory scheme which is absent here and that even in that context it does not open the door to the admission of anything at all which the applicant, here the Director of Corporate Enforcement, thinks relevant.
In my view, in Ireland with its distinctive legal system and in particular the distinctive structure of rights arising out of the constitution, the position is still clearer.
I wish to make it clear that in my view the fundamental objection to the admissibility of hearsay evidence in proceedings before a court is that, to the extent that it is admitted it deprives the applicant of his right to cross-examine. This case, like many of these applications, features allegations of a kind which, if they could be stood up in evidence, would amount to conduct disgraceful in a businessman and company director and would be gravely damaging to his reputation and his ability to earn a livelihood. Persons, official or otherwise, who makes such allegations must be prepared to stand them up in direct evidence. The person against whom they are made, if he contests them as the Baileys clearly do, is entitled to the rights identified in Re Haughey [1971] IR 217 including, vitally a right to confront and cross-examine the witnesses against him. This is not a technicality but the exercise of a right which, as I have observed elsewhere, has been the means of the vindication of innocent people.
The Director argued that he must, even in the case of a contested case, first make some showing in affidavits; that he cannot compel any person, such for example the auditors or the revenue staff to swear an affidavit; and therefore he should be able to rely on these reports at least at an early stage. He did not say that any particular person had, in fact, refused to swear an affidavit.
Certainly it is true that people against whom disgraceful allegations of the sort the Director is making here are entitled to notice of the nature of the allegations and the evidence which is said to support them. But, on the basis of Re Haughey, they are entitled to have these allegations made viva voce and to cross-examine those who make them. Paper does not refuse ink; and for that reason it would be disgraceful in the Director to put on affidavit, on the basis of hearsay, an allegation which he lacks a witness to stand up, and I am sure he would not do so. But the nature of the evidence can be notified without putting it on affidavit on the basis of hearsay and it is wrong that evidence which may be wholly exploded in cross-examination should go on to enjoy a malign half life in hearsay affidavit form. There is in my view no reality in the Director’s repeated suggestions that he would be in some way at a disadvantage if he could not put these allegations on affidavit: he would not and he can easily notify the persons against whom he is making accusations of the nature and substance of them in all necessary detail even though he cannot force such persons to make an affidavit.
I am of the opinion that, in the absence of the Haughey rights, a person, a company director or not, simply cannot be put to answer. His right to have only admissible evidence deployed against him does not depend on what answer he makes to an ex parte statement of the case against him, made on the basis of hearsay.
Procedural issues.
Some of my colleagues have expressed understandable concerns about the procedures adopted in this case, and specifically about the bringing of an interlocutory motion to strike out certain evidence filed on behalf of the moving party.
I wish to say that, in the most unusual circumstances of this case, I do not share these concerns. It is notable that the evidence which is the subject of the present appeal was clearly and manifestly inadmissible evidence. Portions of it were rank hearsay, other portions consisted of an attempt to deploy in litigation, as a weapon of offence, portions of the findings of a Tribunal of Inquiry. This is legally impossible by reason of a decision of this Court of the highest authority. In those circumstances, I would be extremely sorry to think that a person against whom this inadmissible evidence was sought to be deployed could do nothing about it until the trial of the action. If this were so, I believe it would confer a wholly unmerited tactical advantage on the party deploying evidence which he knows to be inadmissible. Firstly, the evidence would be on the record of the Court publicly available. Secondly, the person against whom it was deployed would have no certainty until the trial as to how the issue of its admissibility would be resolved. From this it follows that he would have to make his tactical and evidential preparations for the trial on the basis that the evidence to which he objected might nonetheless be admitted. This in turn might easily (and in the present case in my view would probably) involve him in answering material not properly deployed against him and perhaps in committing himself on matters which do not properly arise at all. It would add to the length and therefore to the expense of the hearing.
I entirely agree with the finding of the learned trial judge that:
“It is clear that the evidence supporting any alleged wrongdoing at a hearing which is dealt with on affidavit must be just as inadmissible as evidence which would be given in court by a witness at an oral hearing”.
Equally, regard must be had to the provisions of Order 40, Rule 4:
“Affidavits shall be confined to such facts as the witness is able of his own knowledge to prove, and shall state his means of knowledge thereof, except on interlocutory motions…”.
In this case, the Director of Corporate Enforcement filed affidavits which manifestly contain factual material which the witness is not able of his own knowledge to assert. He did this, quite clearly, for some litigious advantage to himself to which in my view he is not entitled.
I consider it would be a considerable injustice to the respondents in the underlying action if there were no machinery for the excision of material which is clearly hearsay or otherwise clearly inadmissible, and I find sufficient warrant for the relief that this Court can entertain such an application in Order 40, Rule 4.
I too would dismiss the appeal and the cross-appeal.
JUDGMENT of Mr. Justice Fennelly delivered the 14th day of July, 2011.
1. I am in full agreement with the judgment of Denham J and with the orders which she proposes. They dispose effectively of the matters of substance which have arisen on the appeal.
2. I write independently to express my concern at the procedures employed in these proceedings and their capacity, proved all too clearly by the events, to delay the substantive hearing of applications such as the present.
3. The respondent (whom I will call “the Director”) issued a notice of motion on 8th August 2006 seeking orders disqualifying the appellants as directors pursuant to the applicable provisions of the Companies Acts. On 22nd November 2006, the appellants issued a notice of motion seeking to curtail the evidence on which the Director proposed to rely.
4. The object of the appellants’ application was the striking out of six paragraphs of an affidavit sworn by Dermot Madden and one paragraph 8 of the affidavit of Peter Lacy. The grounds of the application to expunge the impugned paragraphs were:
• the power contained in Order 40, rule 12 of the Rules of the Superior Courts (hereinafter “the Rules”) “to strike out from any affidavit any matter which is scandalous;”
• the power conferred by Order 19, rule 27 of the Rules to strike out “any pleading……on the ground that it discloses no reasonable cause of action or answer and that in any such case or in the case of an action or defence being shown by the pleadings to be frivolous or vexatious……;
• pursuant to Order 40, rule 4 and rule 12 and Order 19, rule 27 and/or the inherent jurisdiction of the Court on the ground that the paragraphs contained inadmissible evidence.
5. The appellants’ application was heard over four days in the High Court in June 2007. Judgment was delivered on 1st November 2007. By order of 28th November 2007, the Director’s action was adjourned for plenary hearing with directions for pleadings. The final order was dated 18th December 2007.
6. The appellants served notice of appeal on 31st January 2008 against those parts of the High Court order where they had not succeeded. The Director served notice of cross appeal on 1st February 2008. The appeal was heard by this Court on 7th June 2011. The matter will now return to the High Court for hearing more than five years after the date of issue of the Director’s notice of motion.
7. There has to be real doubt as to the efficacy of the use of the interlocutory procedures which were deployed in this case. Even if the time analysis were to be confined to the High Court, a period of about sixteen months elapsed between the issue of the notice of motion and the determination, after a four day hearing, of the preliminary issues. The plenary hearing directed by the High Court has been abeyance pending the resolution of this appeal.
8. There has, in reality, been very little discussion in the High Court or in this Court of the jurisdiction invoked to justify the procedures followed. The following remarks must, for reasons which will appear, be regarded as largely obiter.
9. Order 40, rule 12 of the Rules is the first rule invoked by the appellants. It provides:
“The Court may order to be struck out from any affidavit any matter which is scandalous, and may order the costs of any application to strike out such matter to be paid between solicitor and client.”
10. That is the only provision in the Rules which provides a jurisdiction to strike out material from an affidavit. Although Irvine J accepted in the course of her judgment that “the evidence which the [appellants] wish to have excluded at this point cannot be described as either scandalous or vexatious such as to justify its exclusion under O.40, r.12…,” the order of the Court was in fact made pursuant to that rule as well as Order 19, rule 27.
11. It is worth noting that the Irish rule or its antecedents was always confined to “scandalous” matter. The corresponding English rule included “any matter which is scandalous, irrelevant or oppressive.” (see Supreme Court Practice—the White Book- 1979, Order 41 rule 6). The authors of Civil Procedure in the Superior Courts (Hilary Delany and Declan McGrath, Thomson Round Hall Dublin 2005 at 18-61, p. 499), in considering Order 40, rule 12, state:
“The contents of an affidavit will be considered to be scandalous where it attempts to introduce into the proceedings extraneous matters for purposes and motives unconnected with the subject matter of the dispute between the parties. This will particularly be the case where that material is calculated to or has the effect of embarrassing or causing distress or offence to the opposing party. An affidavit will not be considered to be scandalous simply because it contains hearsay or because it contains serious allegations if those are relevant to the issues in the proceedings.”
12. There is a further difficulty about Order 19, rule 27, which provides:
“The Court may at any stage of the proceedings order to be struck out or amended any matter in any indorsement or pleading which may be unnecessary or scandalous, or which may tend to prejudice, embarrass, or delay the fair trial of the action; and may, if it think fit, order the costs of the application to be paid as between solicitor and client.”
13. This rule applies, in its terms, only to pleadings. Order 125, rule 1 defines a pleading as including “an originating summons, statement of claim, defence or counterclaim, reply, petition or answer.” Apart from the fact that it does not come within that definition, I do not think an affidavit is a pleading, as that word is ordinarily understood.
14. In fact and in reality, Irvine J did not make her order under either of those rules. It is clear from her judgment that she made it under Order 40, rule 4. That rule provides:
“Affidavits shall be confined to such facts as the witness is able of his own knowledge to prove, and shall state his means of knowledge thereof, except on interlocutory motions, on which statements of his belief, with the grounds thereof may be admitted. The costs of any affidavit which shall unnecessarily set forth matters of hearsay or argumentative matter, or copies or extracts from documents, shall not be allowed.”
15. Two points may be noted by way of contrast with Order 40, rule 12: firstly, rule 4 confers no power to strike out parts of an affidavit; secondly, it does not confer any power to order that costs be paid as between solicitor and client. The latter point suggests that the power to strike out is to be used only in cases involving striking impropriety.
16. None of these matters were raised in the High Court. Nor are they raised on the appeal. The Director’s argument in the High Court was that the appellants’ motion was premature. The learned trial judge gave full and very careful consideration to this issue. She expressed the view that, at the stage when he issued his motion, the Director must have expected to proceed in reliance on the affidavits then filed. She correctly ruled the Director’s application was not interlocutory and I do not think the Director has contended otherwise. Referring to the special rules of court governing applications of this kind, she said that nothing new should emerge after the filing of the original affidavits and they had to comply with the rule against hearsay: “It is clear that the evidence supporting any alleged wrongdoing at a hearing which is dealt with on affidavit must be just as admissible as evidence which would be given to a court by a witness at an oral hearing.” There can be no question but that the learned judge was correct in this statement of the law.
17. It does not inexorably follow from the fact that the evidence upon which the Director may rely at the hearing, whether on affidavit or otherwise, must be admissible that the court has power by way of preliminary application to excise parts of an affidavit.
18. The learned judge explained in detail her reasons for rejecting the Director’s submission that the application was premature. In substance, it appears to me that she was deciding a preliminary point or several preliminary points of law. Order 25, rules 1 and 2 are the relevant rules. The learned judge was “convinced that the appropriate time for a party to object to the admissibility of evidence in an affidavit supporting proceedings brought by way of originating notice of motion is the time at which the affidavit is delivered.”
19. The learned judge gave her reasons under seven headings. In effect, these come down to identifying tactical or substantive disadvantages for the respondents (the appellants on this appeal) if decisions on the admissibility are to be postponed to the hearing of the application of the Director.
20. A brief summary of the reasons is as follows. A respondent would have to decide whether to counter assertions in affidavits even when he thought them inadmissible. If he decided not to, he might be treated as having accepted the evidence. In any event, the objection might fail at trial. They would then have a problem in making a late application to reply. If the respondent decided to reply, he might be later cross-examined on affidavits he should not have had to swear (if the Director’s evidence was held inadmissible). The costs to the parties would be increased if replying affidavits were sworn in respect of matters later ruled inadmissible.
21. It is not appropriate to consider the strength and merits of these and other points in detail. The matter has not been fully argued on the appeal. In particular, there has been virtually no argument about the nature of the jurisdiction which was exercised by the learned judge. It seems doubtful whether, on the facts of this case, there was any power to strike out parts of affidavits under either Order 40, rule 12 or Order 19, rule 27. Order 40, rule 4, which formed the principal basis of the decision, contains no provision for the striking out of parts of affidavits, but that was what the High Court ordered. Order 25 may need to be considered. It is also clear that account must be taken of the fact that the existence of an independent right of appeal following an order on a motion such as in the present case has, in itself, the capacity to delay proceedings.
22. The Director makes the point that the procedures used have permitted the appellants selectively to challenge parts of the affidavits without giving any indication of the issues they dispute. He expresses concern that these procedures may give rise, in every disqualification case, to split trials, with a first trial based purely on issues of admissibility. In my view, these are real and legitimate concerns.
23. In an appropriate case, consideration will need to be given to the precise basis of the jurisdiction to be exercised and to the most efficient and expeditious way of disposing of disputed issues of admissibility.
