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INM: ODCE inspection should be blocked because it wasn't 'fair or just', says 'extreme damage' was done to share price

The High Court has been hearing day one of Independent News and Media’s judicial review of the application by the ODCE for High Court inspectors to be appointed to the company.

File Photo IRELAND’S HIGHLY CONCENTRATED media ownership has seen it slip down the press freedom rankings Source: Rollingnews.ie

THE HIGH COURT has heard that the Office of the Director of Corporate Enforcement’s application to have High Court inspectors appointed to investigate Independent News and Media should be blocked as it lacks “fairness and natural justice”.

Today, INM’s application for a judicial review of the decision to allow the ODCE apply for High Court inspectors was heard before Justice Seamus Noonan.

The request for a judicial review, a process whereby the courts can rule on the appropriateness of decisions made by administrative, statutory bodies, including those of the judiciary, was made, and granted, on 16 April when the application regarding inspectors was expected to be heard.

Should INM emerge victorious regarding this review, the appointment of inspectors will be blocked, possibly indefinitely.

This morning, counsel for INM Paul Gallagher SC, outlined the company’s reasoning as to why the application should be blocked – specifically that the manner with which the ODCE went about its application was “inherently unfair”.

That application, under the Companies Act 2014, was lodged on foot of a 200-page affidavit regarding the goings-on at a corporate level within the company being submitted by ODCE director Ian Drennan on 23 March.

“We take serious issue with the Director’s submissions and how they characterise the case they wish to make,” Gallagher told the court.

He said that two new affidavits have been filed in the case since last night, regarding the impact of the ODCE application on INM’s share price, in the wake of 23 March.

File Photos: Independent News and Media is today expected to oppose an application by the Director of Corporate Enforcement to have inspectors appointed to investigate the company.  The case is due before Mr Justice Peter Kelly in the High Court this aft ODCE director Ian Drennan Source: Sam Boal/Rollingnews.ie

Late filings of affidavits have become something of a hallmark of this particular saga, with such filings immediately prior to the hearing on 16 April being the basis for a judicial review hearing being granted in the first place.

‘Chance to respond’

“The case is not as asserted by the respondent, being a public body, that is obliged to engage with the subject of its proceedings,” said Gallagher.

Our case is based on the facts of this particular process, on the statutory context, and as to what occurred within that context. We should have been told that he (the Director) was minded to make an application and been given a chance to respond.

Gallagher said that the fact the ODCE was entitled to make a “discretionary decision” is not in dispute, and added that the company being queried is compelled to reply.

However, he described the application for High Court inspectors to a PLC, a fairly rare legal action, as being a “very significant decision”.

He stressed the damage done to INM’s share price in the wake of the initial High Court application by the ODCE: “The consequences of this decision are serious. There is reputational damage. But there is also the impact on a company’s share price, and there is credible evidence that this was seriously impacted by the Director’s decision to apply for inspectors.”

It is damaging to any company to have a significant fall in its share price, but there is also a significant impact on that company’s shareholders.

The crux of INM’s case will hinge on whether or not the ODCE’s decision to go to the High Court with its application, without first informing INM and giving it a right to reply, “lacked fairness and natural justice”, Gallagher said.

Precedent

The plaintiff’s case will hinge on several case law precedents, including a successful appeal to the Supreme Court by developer Paddy McKillen (to have an attempt by NAMA to repossess some of his holdings in 2011 quashed, in Dellway v NAMA) due to the lack of fairness involved in the decision by the agency.

“The process involved here was inherently unfair. It has had serious consequences and was part of a flawed process,” Gallagher said. “The process was one problem, and the timing was another.”

He argued that the standard approach by the ODCE should have been to first put its concerns to INM, and allow it the opportunity to see “is there any way of addressing these issues”. “That seems to me to be fair,” he said.

Instead, the course of action taken by the ODCE was “extremely damaging to the Independent as a media company”, he said.

It was extremely damaging both to the trust of the company’s employees and to the trust of the public, that if a document was found suggesting that 19 people might have had their data targeted, that that was not brought to the attention of the board.

This refers to the so-called INM 19, a group of 19 people including journalists and some senior barristers who allegedly had their emails and interactions with INM penetrated by a third party company in 2014.

The existence of the INM 19 first came to light when the ODCE’s 200-page affidavit was filed with the High Court on 23 March.

Gallagher will continue to outline INM’s case this afternoon.

The hearing is expected to last two days before Justice Seamus Noonan.

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