Dunnes told to pay costs to Harney over legal battle

Dunnes Stores has been directed by the Supreme Court to pay substantial costs to the Minister for Enterprise and Employment following a lengthy legal battle over the Minister's appointment of an authorised officer to two Dunnes companies.

The legal action began in 1998 and has involved four High Court hearings and two Supreme Court appeals. It is still not fully resolved as the Supreme Court last week returned a constitutional issue in the case to the High Court for determination. The court remitted the issue as part of its judgment last Friday allowing Ms Harney's appeal against a High Court decision upholding Dunnes' challenge to the appointment of the authorised officer.

After publication of the McCracken report on payments to politicians, the Minister, Ms Harney, appointed the officer in July 1998 to examine the books and records of Dunnes Stores Ireland Company and Dunnes Stores (Ilac Centre) Limited. The McCracken report concluded payments had been made by Mr Ben Dunne of Dunnes Stores to former Taoiseach Mr Charles Haughey and former Fine Gael minister Mr Michael Lowry, and two companies with which Mr Lowry was associated.

Legal proceedings were initiated by the Dunnes companies and the group's chief executive, Ms Margaret Heffernan.

Finding that the appointment of the authorised officer was justified, the Chief Justice, Mr Justice Keane, said the Minister was entitled to appoint the officer on the ground there were circumstances suggesting the affairs of the companies had beeconducted in a manner unfairly prejudicial to some of the members.

In light of the findings of the inquiries by Mr Justice McCracken and Judge Buchanan, the payments made by the Dunnes companies referred to in the reports of both judges could not be regarded as having any possible legal justification, he said.

The court also concluded the Minister was entitled to have an authorised officer examine the books and records of the companies with a view to seeing how it was possible for the payments to be made without the knowledge or approval of the other directors and the companies' auditors.

In the proceedings, Dunnes had also challenged the constitutionality of those parts of Section 19 of the Companies Act related to the appointment and powers of an authorised officer. However, the constitutional issue was not decided by the High Court and has now been remitted to the High Court for determination.

When the case was mentioned at the Supreme Court yesterday, Mr John McBratney SC, for the Minister, applied for his costs. Mr Richard Nesbitt SC, for Dunnes, argued the costs issue should be left over until the constitutional issue was determined. If Dunnes won on the issue, it would mean the companies should never have been troubled by an authorised officer at all and they would, to use a footballing analogy, have won the "championship".

After considering the submissions, the Chief Justice said the court had decided the Minister was entitled to her costs of the High Court hearing in front of Mr Justice Butler and also to the costs of her successful Supreme Court appeal against that judge's decision.