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	High Court of Ireland Decisions
You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Ansbacher (Cayman) Ltd., Re [2004] IEHC 105 (25 May 2004) URL: http://www.bailii.org/ie/cases/IEHC/2004/105.html Cite as: [2004] IEHC 105, [2009] 4 IR 321

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HC 222/04

THE HIGH COURT

1999 163 COS

IN THE MATTER OF

THE COMPANIES ACTS 1963 – 1990

AND IN THE MATTER OF

PART 2 OF THE COMPANIES ACT 1990

AND IN THE MATTER OF

THE MINISTER FOR ENTERPRISE, TRADE AND EMPLOYMENT

AND

ANSBACHER (CAYMAN) LIMITED (FOMERLY GUINNESS MAHON

CAYMAN TRUST LIMITED, ANSBACHER LIMITED AND CAYMAN

INTERNATIONAL BANK AND TRUST LIMITED)

AND IN THE MATTER OF AN APPLICATION BY

THE REVENUE COMMISSIONERS

PURSUANT TO SECTION 12 OF THE COMPANIES ACTS 1990

Judgment of Finnegan P. delivered on the 25th day of May 2004

This matter comes before me on foot of a motion taken pursuant to the Companies Act 1990 section 12 by the Revenue Commissioners.

Section 12 of the Companies Act 1990 provides as follows:

12.—(1) Having considered a report made under section 11, the court may make such order as it deems fit in relation to matters arising from that report including—

( a ) an order of its own motion for the winding up of a body corporate, or

( b ) an order for the purpose of remedying any disability suffered by any person whose interests were adversely affected by the conduct of the affairs of the company, provided that, in making any such order, the court shall have regard to the interests of any other person who may be adversely affected by the order.

     (2) If, in the case of any body corporate liable to be wound up under the Companies Acts, it appears to the Minister from—

( a ) any report made under section 11 as a result of an application by the Minister under section 8, or

( b ) any report made by inspectors appointed by the Minister under this Act, or

( c ) any information or document obtained by the Minister under this Part, that a petition should be presented for the winding up of the body, the Minister may, unless the body is already being wound up by the court, present a petition for it to be so wound up if the court thinks it just and equitable for it to be so wound up.

The relief sought by the Revenue Commissioners in their Notice of Motion is as follows –

"An Order pursuant to section 12 of the Companies Act 1990 for the purpose of remedying financial and information disabilities of the Revenue Commissioners and of the Collector General by virtue of the manner in which the affairs of the companies named in the title hereof were conducted including inter alia directions for the furnishing to the Revenue Commissioners of access to and copies of all documents related to the Inspector's Report which are not contained in the Report or the Appendices to the Report on such terms and conditions as the Court shall deem fit."

The following were represented at the hearing of the motions in addition to the Applicant that is to say the Inspectors Appointed to Enquire into the Affairs of Ansbacher (Cayman) Limited, Ansbacher (Cayman) Limited and the Attorney General.

By Order dated 22^nd September 1999 the High Court appointed Inspectors pursuant to section 8 of the Companies Act 1990 and ordered that the Inspectors investigate and report to the Court on the affairs of Ansbacher (Cayman) Limited and in particular –

a. To examine and define the nature and extent of the company's Irish business from 1971 to date i.e. the business carried out in the State or any other business carried out on behalf of Irish residents whether in the State or elsewhere.

b. To identify as far as possible all of the parties who are either officers (including shadow directors) and agents of the company, clients of the company or who otherwise assisted in the carrying out of the business at the relevant time.

c. To examine whether the Companies Act 1963 – 1990 were breached by the company, its officers (including shadow directors), agents or third parties at the relevant time and if so to identify the statutory provisions involved in the persons in default in each case

d. To report on any related matters.

The Directors duly completed a Report dated the 6^th June 2002 and presented the same to the High Court. The Report runs to some 18 volumes the first volume consisting of the Report and the remaining 17 volumes consisting of Appendices which contain documents. Access to those documents by the Revenue Commissioners has already been permitted by order of this Court. The Applicant now seeks access to documents obtained by the Inspectors in the course of their investigation not included in the Appendices to the Inspector's Report.

The Application of the Revenue Commissioners

The Application is grounded on an Affidavit of Donnchadh A. Mac Carthaigh a Principal Inspector of Taxes in the Special Projects Team, Investigation Branch of the Office of the Chief Inspector of Taxes. In the Affidavit he refers to a number of passages from the Report of the Inspectors Chapter 29 as follows:-

1. The finding of the Inspectors that:

1. The 'memorandum account' system was operated by Guinness and Mahon and GMCT in a deliberately complex and secretive manner which concealed the names of the clients involved while allowing them to lodge and withdraw funds to and from accounts held nominally for GMCT.

2. Loans were obtained from Guinness and Mahon for GMCT clients on the security of their GMCT deposit, while the existence of this deposit was deliberately omitted from the loan agreement documentation and therefore the general regulatory system of Guinness and Mahon where it would have been seen by bank and Revenue auditors.

2. The finding of the Inspectors that there was evidence tending to show –

1. The discretionary trust structure as operated by GMCT in conjunction with Guinness and Mahon – through its policy of concealing the true object of the trust, the retention of control by the prime mover over the assets of the trust and the access to the funds provided to the prime mover who could withdraw funds in Dublin – amounted to a sham trust structure. There is also evidence to show that the discretionary trust scheme facilitated widespread tax evasion.

2. That the affairs of Ansbacher were conducted with intent to defraud a creditor of some of its clients, that is the Revenue authorities.

3. That Ansbacher may have committed a number of criminal offences namely:

(a) the common law offence of conspiracy (with, inter alia, some of its clients) to defraud, and

(b) the offence of knowingly aiding, abetting, assisting, inciting or inducing another person to make or deliver knowingly or wilfully any incorrect return, statements or accounts in connection with their tax contrary to the provisions of the appropriate tax legislation, now consolidated in sections 1056 and 1078(2) of the Taxes Consolidation Act, 1997.

3. The conclusion of the Inspectors that there is evidence to show that

1. Guinness and Mahon conspired with Ansbacher to defraud a creditor of Ansbacher's clients, namely the Irish Revenue Commissioners, and that there is therefore evidence tending to show that Guinness and Mahon may have committed the offence of conspiracy to defraud contrary to common law.

2. Guinness and Mahon may have committed the offence of knowingly aiding, abetting, assisting, inciting or inducing another person to make or deliver knowingly or wilfully any incorrect return, statements or accounts in connection with their tax contrary to the provisions of the appropriate tax legislation, now consolidated in sections 1056 and 1078(2) of the Taxes Consolidation Act, 1997.

The Special Projects Team was set up to investigate Ansbacher and related accounts and to recover taxes evaded through the operation of such accounts. It is his view that many of the Ansbacher account holders are tax payers who failed to comply with the provisions of the Taxes Acts and that such failures are likely to have led to a serious prejudice in the assessment or collection of taxes. He believes it would be of assistance to the Revenue Commissioners in pursuing this investigation if the remaining documents in the possession of the Inspectors were also furnished to them. He categorised the documents of interest to the Revenue Commissioners as including "correspondence with individuals, companies, bank statements and other miscellaneous documents that were not included in the Inspector's Report as well as papers related to persons whose affairs were investigated although not found to be clients". He further details efforts made by the Revenue Commissioners in the course of its investigation including applications to Court pursuant to the Taxes Consolidation Act 1997 sections 902A and 908. However there remain a number of codes and accounts without names the beneficial ownership of which has not been established.

The Inspector's Response to the Applications

On behalf of the Inspectors two Affidavits have been filed both sworn by Noreen Mackey and in which the concerns and reservations of the Inspectors are expressed. Documentation was furnished to the Inspectors either voluntarily or pursuant to a formal requirement made pursuant to the Companies Act 1990 section 10. The Inspectors are satisfied that parties furnishing information and documentation did so on the understanding that their affairs would only be revealed by the Inspectors to the extent necessary for the purposes of completing the Report required by the Order of the High Court dated 22^nd September 1999. In a number of cases the Inspectors expressly undertook that there would be no disclosure of material except and insofar as necessary for that purpose. In a number of cases the Inspectors examined the affairs of persons who were ultimately found to fall outside the terms of reference of the investigation: in the opinion of the Inspectors it is not appropriate that such information and documents be now disclosed where the same could not properly have formed part of the Inspector's Report. The Inspectors have a concern that whereas the Act in section 11 thereof provides for the Report being furnished to third parties it is now sought that other materials should be made available to third parties and for purposes outside the terms of reference of the Inspectors. Finally there is a concern that further disclosure of information and documents coming into the possession of the Inspectors in the circumstances in which the same is now sought might have an adverse affect on future investigations in that co-operation might be less likely if the present application should succeed.

The Inspectors' concerns were elaborated upon in the second Affidavit. The Affidavit deals with instances in which the Inspectors expressly undertook to keep material confidential except insofar as necessary to include or refer to the same in the Report itself.

Submission by the Attorney General

The Attorney General submitted that the public interest lies in favour of disclosure to the Revenue Commissioners and relevant regulatory bodies. There is a public interest in having outstanding tax debts fully investigated and recovered and in making accountable persons who fail to comply with their obligations as tax payers.

Legal Issues

The first legal issue to arise is the construction of section 12(1).

The section gives the Court a wide discretion – it may make such Order as it deems fit. Accordingly in determining whether to make an Order the Court must take into account all relevant circumstances. What is relevant in the circumstances of any particular application may vary and I propose only to deal with those circumstances which I consider relevant on the present application. However on every application in exercising the discretion the Court must have regard to the interests of any person who may be adversely affected by its Order. While this is expressly mentioned where reliance is placed on section 12(1)(b) it equally applies to every other application under the section. It is to be noted that the discretion conferred upon the Court is not limited to the circumstances mentioned in section 12(1)(a) and (b) in that these provisions are regulated by the word "including" so that the discretion of the Court may be exercised in cases falling outside these provisions. In the circumstances of the present case it is appropriate to have regard to the contractual duty of confidentiality which exists between a bank and its customer and to the constitutional right to privacy and to balance these rights against the interests sought to be vindicated by the Applicant for an Order. However the public interest is paramount: see National Irish Bank Limited & Another v Radio Telefis Eireann 1998 2 IR 465 at 475 where Shanley J. said –

"It seems to me that disclosure of confidential information will almost always be justified in the public interest where it is a disclosure of information as to the commission or the intended commission of serious crime because the commission of such crime is an attack upon the State and the citizens of the State and such disclosure will always be in the public interest. While the disclosure of serious crime will always be in the public interest there is also a range of other activities (which are not necessarily criminal) the disclosure of which may also justify a breach of confidence on the grounds that its disclosure is also in the public interest. It would, I believe, be unwise to attempt to find the boundaries of the so called exceptional public interest and I refrain from doing so other than to observe (as Ungoed – Thomas J. did in Beloff v Pressdram Limited (1973) 1 All ER 241 at p 260) that:-

"Misdeeds of a serious nature and importance to the country will justify disclosure on the grounds that such disclosure is invariably in the public interest.""

Again in the Supreme Court Keane J. approved of dicta by Goff L.J. in A.G. v Guardian Newspapers (No. 2) 1990 1AC 109 at p 282 –

"…although the basis of the law's protection of confidence is that there is a public interest that confidence should be preserved and protected by the law, nevertheless that public interest may be outweighed by some other countervailing public interest which favours disclosure. This limitation may apply, as the Learned Judge pointed out, to all types of confidential information. It is this limiting principle which may require a Court to carry out a balancing operation weighing the public interest and maintaining confidence against countervailing public interest favouring disclosure."

At the same page Keane J. quoted with approval from Denning M.R. in Initial Services Limited v Putterill (1968) 1QB 396 at 405 –

"The disclosure must, I should think, be to one who has a proper interest to receive the information. Thus it would be proper to disclose a crime to the Police; or a breach of the Restrictive Trade Practices Act to the Registrar. There may be cases where the misdeed is of such a character that the public interest may demand, or at least excuse publication on a broader field, even to the press."

Limited disclosure such as disclosure of tax evasion to the Revenue Commissioners, the recipient of such disclosure having a particular interest as opposed to disclosure to the world at large, will almost inevitably result in the Court finding the balance in favour of disclosure.

Section 12(1)(b) provides that an Order may be made for the purpose of remedying any disability suffered by any person whose interests were adversely affected by the conduct of the affairs of the company. Chapter 29 of the Inspector's Report contains its conclusions. The Inspectors found that there was evidence tending to show that the affairs of Ansbacher (Cayman) Limited were conducted with intent to defraud a creditor of some of its clients that is the Revenue Commissioners and was in breach of its own obligations in relation to taxation matters. It follows from this that the Revenue Commissioners were adversely affected their functions being the assessment and collection of taxes properly due. In the case of the Revenue Commissioners I am told that in order to enable them to fulfil their respective functions they require further information which may be available within the documents received by the Inspectors: if I am satisfied that they are less able to fulfil those functions without access to the documents which they now seek then that is a disability within section 12(1)(b).

Insofar as information was furnished to the Inspectors involuntarily or on foot of an express or implied undertaking as to confidentiality I am satisfied that this does not in any way circumscribe the power of the Court to make an Order. In particular circumstances the existence of such an undertaking may be a circumstance which the Court would take into account in the exercise of its discretion.

A factor urged upon me as appropriate to be taken into consideration is the affect which the disclosure now sought might have on the conduct of future enquiries. In Re Pergamon Press Limited (1971) CH 388 at 399 Denning M.R. had this to say about the importance of confidentiality for the effective functioning of investigations and enquiries –

"This investigation is ordered in the public interest. It should not be impeded by measures of this kind. Witnesses should be encouraged to come forward and not hold back. Remember, this not being a judicial proceeding the witnesses are not protected by an absolute privilege, but only by a qualified privilege: see O'Connor v Waldron (1935) AC 76. It is easy to imagine a situation in which, if the name of a witness was disclosed, he might have an action brought against him, and this might deter him from telling all he knew. No one likes to have an action brought against him, however unfounded. Every witness must therefore be protected. He must be encouraged to be frank. This is done by giving every witness an assurance that his evidence will be regarded as confidential and will not be used except for the purpose of the Report. This assurance must be honoured. It does not mean that his name and his evidence will never be disclosed to anyone. It will only have to be used for the purpose of the Report, not only in the Report itself, but also by putting it in general terms to other witnesses for their comments. But it does mean that the Inspectors will exercise a wide discretion in the use of it so as to safeguard the witness himself and any others affected by it."

In summary the matters to which I have regard on these applications are the following:-

1. I must be satisfied that the Order sought relates to a matter arising out of the Report.

2. I am not satisfied that documents and information obtained by the Inspectors from or in relation to persons and companies not mentioned in the Report can be said to be matters arising out of the Report. It must be assumed that such persons are not mentioned and the documents and information not included upon the basis that they concern matters outside the scope of the Enquiry which the Inspectors were ordered to carry out. The jurisdiction to make the Orders sought is a statutory one and I should not go outside the terms of the Statute.

3. I must have regard to the interests of the persons affected by the Order sought. In the present case I have regard to their interests in their contractual right to confidence in their dealings with their bank and their constitutional right to privacy. I balance the same against the public interest in having the Order sought made.

4. I have regard to the possibility that the disclosure of information and documents might adversely affect the co-operation to be received by similar Enquiries in the future.

5. In exercising my discretion I have regard to the circumstance that information and documents were furnished to the Inspectors on an express or implied understanding that the same would be treated in a confidential manner. However such an understanding and any express undertaking given by the Inspectors cannot circumscribe the statutory jurisdiction conferred upon the Court.

Accordingly on this application I must be satisfied that the Order sought relates to a matter arising out of the Report. I am not satisfied that documents and information obtained by the Inspectors from or in relation to persons and companies not mentioned in the Report can be said to be matters arising out of the Report. It must be assumed that such persons are not mentioned and the documents and information obtained from or in relation to them are not included upon the basis that they fall outside the scope of the enquiry which the Inspectors were ordered to carry out. The jurisdiction of the Court to make the Order sought is a statutory one and the Court may not go outside the terms of the Statute. However if a person or company is mentioned in the Report it may be appropriate having regard to the context in which such mention occurs that the Orders sought for access to information and documents relating to them should be ordered. In making such Order I must have regard to the interests of the persons affected by the Order sought and in particular to their contractual right of confidence in their dealings with their bank and their constitutional right to privacy. I must balance the interests of such persons against the public interest in this case in the effective functioning of the Revenue Commissioners. The disclosure sought is not to the public at large but is limited to the Applicant who have a special interest in obtaining the same. I have regard to the possibility that the disclosure of information and documents might adversely affect the co-operation to be received by similar enquiries in the future: however a factor to be taken into account is that the Statute enables the Inspectors to compel co-operation. Again in exercising my discretion I have regard to the circumstance that in some instances information and documentation was furnished to the Inspectors on an express or implied understanding that the same would be treated in a confidential manner. However such an understanding and any express undertaking given by the Inspectors cannot circumscribe the statutory jurisdiction conferred upon the Court. The Inspectors had power to compel the furnishing of such documents and information. As the Statute envisages the making of Orders such as those now sought the making of such Orders cannot amount to a breach of faith by the Inspectors or as working an unfairness.

Conclusion on the Application of the Revenue Commissioners

In these circumstances I am not disposed to make an Order in the terms sought. However in relation to persons and companies mentioned in the Report I am satisfied that the Revenue Commissioners come within the provisions of section 12(1)(b). They have the necessary interest – the collection and assessment of taxes. They suffer a disability – the affairs of the company were conducted in a manner which disabled the Revenue Commissioners from assessing and collecting taxes. I am satisfied that the public interest in the assessment and collection of taxes outweighs the contractual right to confidentiality and the constitutional right to privacy of the individuals and companies mentioned in the Report. I am satisfied that any understanding or undertaking as to confidentiality given by the Inspectors while a factor to be taken into account in exercising my discretion ought not in the circumstances of this case prevent me making an Order. If these individuals and companies have been tax compliant they will suffer no disadvantage: if they were not they will suffer no injustice in discharging their proper liabilities. Accordingly I am prepared to make the Order sought in relation to the following categories of persons and companies:-

Clients of Ansbacher.

Persons and companies found by the Inspectors to have failed to co-operate with their enquiry to include in relation to the latter individual members of the board of that company.

Having made that Order I propose to adjourn the motion with liberty to the Applicant to re-enter the same with a view to obtaining information and documents relating to any other individual or company. Each such individual or company should be named in the application and the Grounding Affidavit should set out sufficient information to enable the Court to be satisfied that the Order is in relation to matters arising from the Report.

I will hear Counsel as to the precise terms of the Orders which I should make and on the issue of costs.

Approved: Finnegan P.