Nature of inquiry into IBRC exposed limits of judge’s powers

Mr Justice Brian Cregan, the High Court judge heading the Commission of Investigation into the Irish Bank Resolution Corporation, has identified a number of very significant flaws in the legislation underpinning his inquiry and has concluded he does not have the power to admit documents into evidence over which a duty of confidentiality or a claim of privilege applies.

If the commission were to do so, he states, it would face successful legal challenges in the courts.

Tribunals of inquiry have proved to be a slow and costly mechanism for investigating the facts and getting answers on matters of public importance. In contrast, commissions of investigation have worked well in the past and are seen as independent, cost effective and efficient at investigating matters and reaching reasoned conclusions.

This is why the Government chose the commission of investigation model to investigate matters of public concern that have arisen in relation to IBRC. However, even when a commission of investigation has been established, without co-operation from the affected parties delays are unavoidable.

The claim of privilege which Mr Justice Cregan has upheld is legal advice privilege. This arises in respect of documents which contain or refer to legal advice furnished to IBRC or the Department of Finance. This type of privilege is long established and well known and is relatively uncontroversial.

The claims of confidentiality are less well known and far more controversial. Banking documents are confidential and a bank is precluded from disclosing its customers’ information without a customer’s consent. There is a public and private interest in protecting and upholding banking confidentiality.

However, the right of banking confidentiality is not absolute and it may be displaced by a court in certain circumstances, these include:

firstly, where the disclosure is required by compulsion of law;

secondly, where there is a public duty to disclose;

thirdly, where the interests of the bank require disclosure;

or, fourthly, where the customer consents to disclosure.

Mr Justice Cregan has considered these exclusions at length and concludes that the first, third and fourth exclusion do not apply to the relevant documents.

In relation to the second exclusion, the duty to the public to disclose the confidential information, the judge states that in each case where this has come before the courts, the courts have engaged in a delicate balancing of the duty of confidentiality with the public interest in disclosure of such confidential information and have permitted an infringement of the right of confidentiality in certain circumstances.

Balancing rights

The judge finds that the commission, with the powers it has been granted by statute, may not undertake the balancing of these rights. The commission of investigation is not a court, rather its powers are set out in the Commission of Investigation Act 2004, and unhelpfully the Act deals with privilege and confidentiality as if they were one and the same thing. The Act states that where the commission determines that privilege or duty of confidentiality applies to a document and where an individual or entity relied on privilege or confidentiality as grounds for refusing to produce a document, then the document is not evidence before the commission.

The Act allows the commission to make a “summary version” of the document that excludes the privileged or confidential information. However, it is easy to see how it would be impossible to summarise banking documents so as to exclude all confidential information while leaving any useful information.

Most significantly, Mr Justice Cregan has held that the Commission of Investigation Act 2004 does not give him the right to make a decision on whether or not the issue of public importance is strong enough to displace the right of confidentiality. Unhelpfully, and unlike other inquiry legislation, such as the Commission to Inquire into Child Abuse Act 2000, the 2004 legislation does not allow Mr Justice Cregan to bring these matters to the High Court to get directions in relation to these matters.

Roadblock

This raises the questions of why the IBRC commission has hit this roadblock and why the problem has only become apparent now. The answer lies in the subject matter of the investigation. Unlike previous commissions, such as the Commission of Investigation into the Banking Sector, the IBRC commission is tasked with investigating specific banking transactions, which are by their nature highly confidential and sensitive.

In previous commissions of investigation the people who gave evidence were happy to waive their right of confidentiality so as to ensure that issues of public importance were investigated or the commission was in a position to make a “summary version” of documents excluding the privileged or confidential information.

However, a bank is not in a position to “waive” its customer’s right of confidentiality. Mr Justice Cregan states that the commission considered writing to the various customers of the bank to ask them to waive their right to confidentiality but concluded that customers wouldn’t voluntarily waive a right to confidentiality to permit a commission of investigation to investigate the write-off of its loans.

Back on the road

What can be done to get the IBRC commission back on the road? The legislation governing the commission could be amended to allow Mr Justice Cregan to apply to the High Court and allow it decide whether the confidential banking information should be disclosed in the public interest or to give the commission the power to make this decision.

This will lead to delays if affected parties seek to argue legal issues relating to banking confidentiality before the High Court. What is more important is whether retrospectively amending the legislation when the commission is already set up would be subject to legal challenge.

Even if the commission was abandoned in favour of a tribunal the same issues of banking confidentiality would arise.

Michelle Carey is a barrister