Supreme Court rejects Dunnes' claim

The Minister for Enterprise and Employment is entitled to appoint an authorised officer to two Dunnes Stores companies, according to the Supreme Court.

The three-and-a-half-year legal battle between Dunnes and the Minister, Ms Harney, will continue probably into next year, however, because the five-judge court has also directed that the matter should again be returned to the High Court.

The lower court will now look at some constitutional issues which were not dealt with previously. They relate to the constitutionality of the parts of the Companies Act on which the Tánaiste is relying.

The Tánaiste has been trying since July 1998 to have an authorised officer examine the books and records of Dunnes Stores Ireland Company and Dunnes Stores (ILAC Centre) Ltd.

Her decision followed the publication of the McCracken report into payments to politicians. The report concluded that Mr Ben Dunne - the former executive chairman of Dunnes Stores - had made payments to former taoiseach Mr Charles Haughey and former Fine Gael minister Mr Michael Lowry. He also made payments to two companies with which Mr Lowry was associated.

The appointment was challenged by Ms Margaret Heffernan, the current chairman of Dunnes Stores. To date there have been three full High Court hearings and judgments on the issue. In late 1998, the High Court found the Minister had to give reasons for the appointment. These were provided but were challenged by Dunnes in further proceedings.

In a High Court decision in April 1999, Mr Justice Kinlen rejected Dunnes' claim that the appointment was invalid but ruled the authorised officer had exceeded his powers. Both sides appealed to the Supreme Court which ordered a full rehearing in the High Court.

The case was reheard by Mr Justice Butler who, in July 2000, found the Minister's reasons for the appointment were unreasonable and irrational and in excess of her powers under the Companies Act.

The Minister appealed to the Supreme Court which yesterday unanimously allowed the appeal. However, they qualified the judgment because issues relating to the constitutionality of provisions of the Companies Act (under which the appointment of the authorised officer was made) had not been argued before the Supreme Court.

Although they were part of the Dunnes' case, the constitutional issues did not figure in the previous two High Court judgments because the High Court judges had determined the challenges on other legal grounds.

The Supreme Court yesterday returned those constitutional issues to the High Court for determination.

In his judgment, the Chief Justice, Mr Justice Keane, said that in light of the findings of the McCracken report, payments made by Dunnes' companies referred to in that report could not be regarded as having any possible legal justification.

The Minister was clearly entitled to conclude that an examination of the companies' books and records would throw greater light on an issue which was not of great significance in the context of the McCracken inquiry - namely, how, given the detailed requirements of the legislation regarding the keeping of records by companies, the auditing of accounts and the access of directors to the companies' records, it was possible for these payments to be made without the knowledge or approval of the other directors and the companies' auditors.

The Chief Justice also found the range of documents sought by the authorised officer was not unduly extensive "having regard to the scale of the misuse of the companies' assets" already identified.