Supreme Court rejects Stanley application in Bula case

The Supreme Court yesterday turned down an attempt by former Bula Resources chairman Mr Jim Stanley for leave to seek an order quashing the report of the government-appointed inspector into the beneficial ownership of shares in Bula Resources Holdings plc.

The Chief Justice, Mr Justice Hamilton, said it appeared quite clear from Mr Stanley's own detailed affidavit that he made "no effort, good, bad or indifferent" to assist the inspector, Mr Lyndon MacCann, in determining the issues which Mr MacCann had been authorised to investigate.

In spite of High Court orders, Mr Stanley did not make himself available for examination by the inspector in Moscow regarding the issues in the matter, the Chief Justice added.

He was delivering judgment on an appeal by Mr Stanley against the High Court's refusal last month to grant leave to seek an order quashing the warrant, issued by the Tanaiste and Minister for Enterprise, Trade and Employment, Ms Harney, appointing Mr MacCann. The High Court also refused leave to seek an order quashing the entire report of Mr MacCann or aspects of that report.

In his report, Mr MacCann found Mr Stanley had personally benefitted by some £660,000 sterling (£738,833) from the sale of Bula shares transferred to Mir Oil Development Limited. The inspector also found that Mr Stanley was responsible for a bogus oil find report relating to an oil well - Well 705 - in western Siberia.

Mr Stanley was present in court for much of yesterday's hearing but not for the court's decision. Mr MacCann was also present at stages of the hearing.

Making the application, Mr James Gilhooly SC, with Mr Robert Barron, for Mr Stanley, argued the inspector had conducted his investigation in a procedurally irregular and unfair manner and exceeded his remit.

He submitted Ms Harney had failed to consider whether the appointment of an inspector was necessary in all the circumstances and appointed Mr MacCann with a view to his investigating matters outside his remit.

Having regard to the inquiries made by Mr MacCann regarding information available on the drilling results of Well 705, Mr Barron submitted the appointment of the inspector was made as much with a view to investigating a possible case of insider dealing as of ascertaining the true beneficiary of shares in the company.

The inspector's findings regarding Well 705 were of a more grave and damning nature than the other findings and had serious implications for Mr Stanley's good name, it was submitted. In those circumstances, the making of findings of fact as they were made by the inspector was fatally flawed.

Mr Barron said the courts could to some extent aid the rehabilitation of his client if those parts of the report dealing with Well 705 were quashed.

Delivering judgment, Mr Justice Hamilton refused leave to seek an order quashing the warrant appointing the inspector. He said that warrant was issued on October 23rd, 1997, and, under court rules, it must be challenged within six months unless there was a good reason to extend time.

He said an affidavit from Mr Stanley to the inspector did not provide any good reason for the Supreme Court to extend the time and the court would refuse leave to seek an order quashing the warrant of appointment.

On the argument that leave should be granted to quash the inspector's report because he failed to adhere to fair procedures, the Chief Justice said it was submitted that Mr Stanley was not given any, or any adequate, opportunity to cross-examine the people interviewed by Mr MacCann and that his report did not sufficiently address the primary facts but involved mere expressions of opinion by the inspector.

It was clear the inspector carried out a most exhaustive, careful and meticulous investigation of the matters, Mr Justice Hamilton said. In a letter of June 16th, 1998, Mr MacCann had set out in great detail matters on which he sought observations from Mr Stanley. Mr MacCann gave Mr Stanley two weeks to respond and later extended that time.

It was argued the time allowed for reply was too short and in breach of fair procedures, the Chief Justice said. The subsequent correspondence between the parties was important and illustrated the attitude of Mr Stanley to the entire investigation, he continued. Mr Stanley had not said at any time he needed more time to respond but sought time to consider if he would reply or not.

Having regard to the entire history of the proceedings and the investigation and Mr Stanley's constant lack of co-operation, the court considered the time offered for reply was not unreasonable and there was no breach of fair procedures in the manner in which the inspector conducted his investigation.

Mr Justice Hamilton said it was also submitted the inspector was not entitled to report on his findings regarding Well 705 when he had already come to conclusions on the beneficial ownership of the shares. It was further submitted the inspector did not differentiate between findings of fact and opinion and this was important because an inspector's report could be admissible in civil proceedings.

It was for a court dealing with such matters in civil proceedings to determine whether the findings in the inspector's report were within or outside his powers, the Chief Justice said. He had been told there were civil proceedings taken against Mr Stanley.

For all those reasons, he would dismiss the appeal. Mr Justice Murphy also dismissed the appeal, as did Mr Justice Lynch, who noted the non-co-operation of Mr Stanley with the inspector's investigation and that he had deliberately disobeyed orders of the High Court to attend before the inspector in Moscow.

Mr Justice Lynch said Mr Stanley had not come to the court with clean hands and this indicated his application for leave should be refused in any event.