Court quashes disciplinary decision where accountant was appointed for unauthorized fraud investigation purpose.

THE SUPREME COURT

Record No. 312/1999

Murphy J.

Murray J.

Hardiman J.

McGuinness J.

Fennelly J.

BETWEEN

GILES J. KENNEDY CARRYING ON PRACTISE UNDER THE STYLE OF GILES J. KENNEDY AND COMPANY

APPLICANT

AND

THE LAW SOCIETY OF IRELAND PATRICK JOSEPH CONNOLLY AND AISLING FOLEY

RESPONDENTS

JUDGMENT delivered the 20th day of December, 2001. by FENNELLY J.

This judgment should be read with the judgment of Murphy J delivered on 4th April 2001. That was the unanimous judgment of

the Court. I do not propose to repeat the account of the facts and issues contained in that judgment except where necessary.

I will refer to the Applicant/Appellant as Mr Kennedy and to the Respondents, except where necessary, as the Law Society.

The principal conclusion of the judgment of Murphy J, which is now relevant, is set out at page 17 of the unreported text. He

rejected the submission of the Law Society that “the investigation of fraudulent claims is not an unauthorised purpose under

the Solicitors’ Accounts Regulations 1984.” He also held:

“As an investigating accountant is not empowered by the Regulations to investigate fraudulent claims processed by a

solicitor he may not be appointed for that purpose.”

The issue at present before the Court flows from the ensuing passage:

"In the present case it would seem that Ms Foley was appointed for a duality of purposes or on the basis of an ulterior

motive. As the learned trial judge held, Ms Foley was required to under take a "two-pronged investigation". One prong of

the investigation, that is to say, the ascertainment by her of whether Mr Kennedy had complied with the Accounts

Regulations was fully and properly disclosed: the other prong, the investigation of suspect litigation processed by Mr

Kennedy's firm, was concealed initially though quickly became apparent.

Both investigations proceeded and were completed in spite of the objection by Mr Kennedy to the production of certain

confidential documents which, ultimately, he was required to produce by the order of Costello J made on the 29th day of

July, 1993. The report of Ms Foley formed the basis of the decision of the Society to seek an inquiry (in February 1996)

by the Disciplinary Tribunal of the High Court into the conduct of Mr Kennedy. Whether in reaching that decision the

Society was entitled to rely on all or any part of Ms Foley's report is a matter which would require further consideration

..."

As a consequence, Murphy J stated on the last page of his judgment:

"There remains the question as to what legal consequences flow from the appointment by the Society for two purposes

one of which was ultra vires and the other intra vires. The matter must be remitted to the High Court for the purposes

of assessing damages (if any) to be awarded to Mr Kennedy but it would seem appropriate for this court to determine,

first, whether the appointment of Ms Foley was defective in whole or in part and, secondly, whether the report prepared

by her or any part of it can be relied upon by the Society for any purpose. It will be necessary also to consider the

nature of the order to be made by this court having regard to the complex history of the proceedings and the orders

already made herein."

Mr Kennedy’s Submissions

Mr Kennedy relies strongly on the statement of Murphy J, already quoted, that Ms Foley, the accountant appointed by the Law

Society to investigate his practice, “was appointed for a duality of purposes or on the basis of an ulterior motive.” Mr Gilhooly,

Senior Counsel, for Mr Kennedy argued that the investigation of fraud was in fact the dominant motive for the appointment ,

but that, even if it was not, the appointment was invalid because the Law Society took into account irrelevant considerations

when making its decision. Consequently, he claimed the reports of the investigating accountant so appointed cannot be relied

on for any purpose.

The learned trial judge said he was unable to formulate a view as to which of the two purposes for which the accountant was

appointed was dominant. He acknowledged the distinction between the time and effort expended on the enquiry and its purpose

and concluded that he could not form any different view as between the underlying purpose and a 50/50 apportionment

between them. Mr Kennedy asks this Court to review this conclusion and to substitute a finding that the investigation of

fraudulent claims was the dominant motive. In my view, this Court cannot accept that submission. The finding is essentially one

of fact, found by the learned trial judge after a lengthy and careful hearing, as to the degree of importance to be attributed to

two different sources of motivation. The principle constantly applied by this Court with regard to the exercise of its appellate

jurisdiction in relation to findings of fact by a judge sitting in the High Court was comprehensively explained by McCarthy J in

Hay v O’Grady [1992] I.R. 210. As applied to this case, it means that the finding of Kearns J cannot be disturbed once it is

supported by evidence. In this case, there was ample evidence to ground his conclusion.

Hence, the submissions of Mr Kennedy must be approached on the alternative basis advanced by him, namely that the decision

of the Law Society was motivated in part by an impermissible consideration, namely that Mr Kennedy’s practice should be

investigated in order to discover whether it was being used to process fraudulent personal injury claims. Mr Kennedy relies on

Cassidy v Minister for Industry and Commerce [1978] I.R. 297 (Cassidy), on Re Murray’s Application [1987] N. I. J. B. 12 and

on R. v Inner London Education Authority [1986] All ER 29 for the proposition that it is sufficient to establish that the decision-

maker took into account an impermissible consideration in order to conclude that the decision arrived at was invalid.

Mr Kennedy also argued that a consequence of the invalidity of the appointment of the investigating accountant is that the

evidence obtained by the accountant and, in particular, the report made to the Law Society cannot be used by the decision-

maker. Counsel cited The People (Attorney General) v O’Brien (“O’Brien’s case) [1965] I.R. 142, The People v Shaw [1982] I.R.

61 The People (D.P.P.) v Kenny [1990] 2 I.R. 110. All these were criminal cases. They concerned the admissibility as against an

accused person of evidence that had been obtained by means of the infringement of his personal rights guaranteed by the

Constitution. The gravamen of these decisions is summed up in the judgment of Finlay C.J., speaking for the majority in the last

of these cases, where he said (page 134):

"I am satisfied that the correct principle is that evidence obtained by invasion of the constitutional personal rights of a

citizen must be excluded unless a court is satisfied that either the act constituting the breach of constitutional rights

was committed unintentionally or accidentally, or is satisfied that there are extraordinary excusing circumstances which

justify the admission of the evidence in its (the court's) discretion."

No authority was cited which applied this line of case law to invalid administrative acts.

It was also claimed, however, that the use by the Law Society of the Solicitors’ accounts Regulations to investigate fraudulent

insurance claims when that was not authorised by the Regulations, amounted to the employment of the “colourable device” of

the Regulations to achieve indirectly what could not be achieved directly. This submission was made by reference to the

language of Walsh J in The People (D.P.P.) v Howley [1989] I.L.R.M. 629. Walsh J there accepted, at least as a hypothesis, that

the arrest of the suspect on suspicion of commission of one offence (cattle maiming) but in reality in order to investigate

another (murder) would have been such a “colourable device” as to render the arrest unlawful and the evidence of a confession

of guilt of the murder inadmissible. The offence of cattle maiming had been made a “scheduled offence” for the purposes of the

Offences against the State Act, 1939 and the gardai were empowered to arrest a person and to detain that person for strictly

limited periods of time to enable them to investigate whether he had committed it. Walsh J found that the evidence justified the

trial judge in finding that the gardai were genuinely investigating both the murder and the cattle maiming. Hence, the

“colourable device” argument failed. Mr Kennedy did not allege, however, that the learned trial judge had made any finding that

the Law Society had used the appointment of the accountant as a colourable device, but asked this Court so to find.

Insofar as the evidence to be proferred was obtained illegally, as distinct from unconstitutionally, counsel for Mr Kennedy,

relying on a passage from Charleton, McDermott and Bolger, Criminal Law (Butterworths. Dublin. 1999, par 2,59) submitted that

the Court should engage in the sort of balancing exercise posited by Kingsmill Moore J in the following passage from his

judgment in O’Brien’s case:

“It appears to me that in every case a determination has to be made by the trial judge as to whether the public interest

is best served by the admission or by the exclusion of evidence of facts ascertained as a result of, and by means of,

illegal actions, and that the answer to the question depends on a consideration of all the circumstances. On the one

hand, the nature and the extent of the illegality has to be taken into account . Was the illegal action intentional or

unintentional, and, if intentional, was it the result of an ad hoc decision or does it represent a settled or deliberate

policy? Was the illegality one of a trivial or of a technical nature or was it a serious invasion of important rights, the

recurrence of which would involve a real danger to necessary freedoms? Were there circumstances of emergency or

urgency which provided an excuse for the action?"

The Law Society’s Submissions

The Law Society, in its written submissions, claimed that the report made by the accountant could be severed, that the parts

concerned with fraudulent claims were readily distinguishable from those dealing with infringements of the accounts regulations.

The report could, therefore, be severed. However, at the hearing of the appeal, Mr Kevin Feeney, Senior Counsel, on behalf of

the Society extended this severance argument to the decision appointing the investigating accountant. The decision itself can,

he claimed, be severed and what emerges is a body of information.

In the latter respect, reliance was placed on the judgment of Henchy J in Cassidy. The Court held that the order made by the

Minister controlling the prices of intoxicating liquor in Dundalk was unreasonable and, therefore, invalid insofar as it subjected

the sale of liquor in lounge bars to the same maximum prices as its sale in the very different conditions of public bars. The Court

did not, nonetheless, annul the order in its entirety but chose to interpret it so as to restrict its application to sales in public

bars. Henchy J stated:

"My adjudication is that the impugned orders are not invalid, for being ultra vires, in so far as they apply to public bars

but that their extended application to lounge bars is not within the scope of the delegated legislative functions. If the

orders had been composed in such a way that the provisions applicable to public bars could be severed from the rest, I

would rule that such provisions should be severed and declared valid as being intra vires. But the orders do not lend

themselves to verbal severance: they simply fix maximum prices without reference to whether they are charged in

lounge bars or public bars. However, there is no reason why the orders should not be severed in the range of their

application, so that they may be preserved and implemented in so far as they are intra vires, and ruled inoperable only

in so far as their application would run into the area of ultra vires: ..."

In a similar way, it was contended that the appointment of the investigating accountant could be held valid insofar as it

authorised investigation of the books and accounts and invalid only insofar as it was designed to investigate the processing of

fraudulent claims.

The Law Society submitted that Mr Kennedy could succeed in quashing the entire decision only if the appointment of the

accountant was, in the terms of Howley’s case, a “colourable device.” It was accepted that there was a duality of purpose in

making the appointment, but the Society was entitled to investigate the accounts. Even if the impermissible investigation of the

fraudulent claims was the dominant purpose, that would not invalidate the decision. The learned trial judge observed that if “the

time and effort expended on this particular investigation lends itself to a 50/50 apportionment between the books and

accounts on the one hand and fraudulent claims on the other, and if the purposes can be similarly assessed, [he did] not see

how the former part of the investigation could in such circumstances be described as a “colourable device.” The appointment

for the legitimate and permissible purpose of investigating compliance with the accounts regulations would have to have been a

“colourable device” for the pursuit of the illegitimate one.

So far as the use of the accountant’s report was concerned, it was submitted that the severance argument would apply. It was

perfectly possible to exclude those parts of the report which represented the fruits of the impermissible part of the

investigation. The Law Society cited a number of examples of the severance of different types of legal instruments, though

Cassidy remained the principal authority. State (McKeown) v Scully [1986] I.L.R.M. 133 (a finding of suicide in an inquest

verdict) and Glencar Exploration plc v Mayo County Council [1993] 2 I.R. 237 (one provision of a county development plan

prohibiting the grant of any permission for mining) were examples of courts deciding that they could annul severable parts of a

decision. In other cases, it has been decided that an impugned provision was not severable. In the case of legislation found to

be repugnant to the Constitution, the question is one of interpretation of the legislative intent. If severance were to have the

effect of leaving in force a legislative provision that would not represent the intent of the legislature, severance would not take

place in spite of the provisions of Article 15, s 4, sub-s. 2 of the Constitution. In Pigs & Bacon Commission v McCarron [1981]

I.R. 451, the Court of Justice of the European Communities had given rulings that had the effect that a statutory levy scheme

in respect of the sale of pork products was invalid insofar as it was devoted to purposes, principal amongst them an export

bonus scheme, which that court considered to be incompatible with Community law. The Pigs and Bacon Commission sought,

nonetheless, to recover such part of the levies as was not used to fund such purposes. The plaintiff was successful in the High

Court, relying on Cassidy. This court, however, distinguished Cassidy and reversed that decision. O’Higgins C.J. considered that,

to allow the plaintiff to recover a part only of the levy which the plaintiff had itself certified as payable, would involve the

court, and not the plaintiff Commission, in declaring a rate of levy.

CONCLUSION

This court must approach the matter on the basis of the facts found by the learned trial judge. I have already referred to the

conclusion of Murphy J at the outset of this judgment. At page 3 of the unreported judgment, he also said:

"By letter dated the 24th May, 1993, Mr Connolly wrote informing Mr Kennedy of the fact that Ms Foley had been

appointed to carry out the investigation and drawing the attention of Mr Kennedy to his obligations under the accounts

regulations. It is clear (and the learned trial judge has so found) that Ms Foley was specifically instructed by the Society

that in addition to inspecting the books of account she was to look for evidence of fraudulent claims passing through the

practice and, secondly, that these instructions were not disclosed to Mr Kennedy at the commencement of the

investigation or prior thereto. Ms Foley was aware of the Lillicrap case and was further informed by Mr Connolly of his

suspicions in relation to other fraudulent claims which might have been processed by Mr Kennedy's office. Ms Foley was

required to investigate whether Mr Kennedy's firm had complied with the Accounts Regulations and whether his firm was

involved in spurious claims. It was, as the learned trial Judge held, a two-pronged investigation."

I do not think that it is possible to do justice to the arguments concerning the validity of the exercise by the Law Society of its

statutory powers and duties, without some further reference to the facts of the case.

At the conclusion of the evidence, the learned trial judge made two specific findings of fact as follows:

'Firstly, I found that, in initiating the investigation, the investigating accountant was specifically instructed by the Law

Society that, in addition to looking at the books of account, to look for evidence of fraudulent claims passing through the

practice. Secondly, I also found on the evidence that this latter aspect of the inquiry was not disclosed to Mr. Kennedy

either prior to or at the commencement of the investigation.'

He went on to observe that the first of these findings was consistent with the fact that counsel for the Law Society accepted

from the outset that about 50% of the investigation work actually performed was in respect of the books, accounts and

financial records of the practice and the other 50% related to the presence or otherwise of fraudulent claims passing through

the practice.

Mr P. J. Connolly gave evidence that, prior to 15th April, he had information from a reliable source within the Council of the Law

Society that there was a connection between the applicant and one Rossi Walsh, a person suspected of organising bogus

claims, in particular, that the latter referred claims to the practice. He was also aware of rumours to the same effect circulating

in the profession. The applicant, it should be noted, agreed in evidence that Mr Walsh, whom he described as “the infamous

Rossi Walsh - dial a witness,” had been involved in the Lillicrap case (see judgment of Murphy J.) and was linked at one time to

perhaps twenty other cases in the office, before Mr Kennedy, as he put it, “cleared them out.” Mr Connolly maintained that the

investigation was set up for two distinct reasons, namely, to ascertain compliance with the Solicitors Accounts Regulations and

to inquire if the practice was involved in processing spurious claims.

Miss Foley said, in evidence, that she was made aware of two things prior to commencing the investigation: that there were a

number of complaints relating to non-payment of fees by the practice; that the applicant’s practice was one of a number in

Dublin suspected of processing bogus claims and, in particular, that there was a suspicion of fraudulent claims or referrals by Mr

Rossi Walsh. She was given a copy of the transcript in the Lillicrap case. She was given a list of other names and a working

questionnaire which had been prepared in relation to the investigation of other practices where there were similar concerns. Her

instructions were to review files in their entirety.

Miss Foley sought and was provided with a certain amount of accounting information. Shortly after the commencement of the

investigation, Miss Foley asked for the production of 19 files including that of the Lillicrap case. These files had in common that

all the defendants bore the surname “Glass,” which was the name of the defendant in the Lillicrap case. It is clear from other

evidence, which I find unnecessary to recount, that Miss Foley sought information about these and similar matters.

Mr Kennedy became alarmed at the turn the investigation was taking and suggested to Miss Foley on 1st July that she was

following a “hidden agenda,” an expression he was to use in correspondence he commenced with the Law Society. On 5th July,

he wrote in the course of a lengthy memorandum to Miss Foley with a copy to the Law Society:

“It occurs to me and I must formally put it to you as the investigating accountant that you and your principals are

operating a hidden agenda. It appears that your principal concern and the ‘substantive issue’ is not an enquiry into

compliance with the Solicitors Accounts Regulations but an enquiry into Clients rather than this firm of solicitors.”

The Law Society did not inform Mr Kennedy of their concerns regarding bogus claims. Indeed, it is not an exaggeration to say

that they concealed it from him. Mr Connolly, in a letter of 6th July 1993 to the applicant said:

“I take exception to your reference to a “hidden agenda” which is allegedly being pursued by the Society.”

In the context of the vigorous contemporaneous correspondence between the applicant and the Law Society, this was

correctly described by the trial judge as a denial. The then Chairman of the Compensation Fund Committee, in evidence,

defended this evasion on the simple basis that an investigation of fraudulent claims could not be disclosed to the subject.

Furthermore, Miss Foley denied or evaded the issue of a “hidden agenda” and told Mr Kennedy that she was merely trying to

make sense of the client listing by grouping similar names together. The trial judge described this answer as "plainly untrue."

It is regrettable, not to use any stronger expression, that Mr Kennedy did not receive a frank and truthful answer to his

enquiries. The Law Society argued before the High Court that the applicant had identified the wrong hidden agenda, by saying

that the investigation was into the clients of the practice, whereas the real focus was the applicant’s own involvement.

Although it was not in force at the time, it is interesting to note that section 14 of the Solicitors (Amendment) Act, 1994, in

case of an investigation of alleged misconduct by a solicitor, obliges any authorised person attending at the place of business of

a solicitor to disclose of the purpose of his attendance.

I approach the question of the validity of the decision appointing the investigating accountant on the basis that it was made in

order to carry out a two-pronged investigation. It has not been determined that either purpose was dominant; nor has it been

determined that the investigation of the accounts was a mere “colourable device” for the investigation of the processing of

bogus or fraudulent claims. On the other hand, it has been found that the Law Society concealed the latter purpose, going to

the lengths of deceit for that purpose.

The consequence of the failure to make a finding that the appointment of the accountant was a mere “colourable device” is

that the acceptance, by implication, in the judgment of Walsh J in Howley’s case that the evidence obtained by the detention

in that case would have been inadmissible does not apply. By analogy, it does not automatically follow, in this case, that the

appointing decision should be declared invalid.

The learned trial judge asked himself, in the first instance which of the two admitted purposes of the Law Society was the

dominant one only to conclude that he was unable to come to any view on the matter. He then moved to a test based on the

question of taking into account an “improper consideration” and concluded that the decision could be impugned only if the

consideration in question was no more than a “colourable device.” In applying this test to the case before him, he adopted the

argument of the Law Society derived from Howley's case. I believe that he was correct not to apply a test based on “dominant

purpose” but in error in adopting the “colourable device” test. The latter approach implies that an element of mala fides is

necessary in order to impugn such a decision, which is not correct.

On the other hand the Law Society has cited no authority to support its proposition that, a decision made under statutory

powers to achieve a plurality of purposes, cannot be quashed unless it is shown that the pursuit of one proper one is a mere

“colourable device” for the achievement of the other improper one. This is not surprising. Such a test would, in my view,

seriously undermine the effectiveness of the courts in their scrutiny of administrative action. This is not to deny that the notion

of “colourable device” may, in appropriate cases play a role in judicial review.

It is appropriate to bear in mind, in the first instance, the power which was being exercised by the Law Society. This is set out

at Regulation 29 of the 1984 Regulations and is as follows:

"(1) In order to ascertain whether these Regulations have been complied with, the Council acting either on its own

motion or on a written complaint lodged with it, may approve and appoint an accountant for such purposes as

hereinafter mentioned.

(2) Where the Council approves and appoints an accountant, the solicitor shall produce at a time and place appointed by

the Council his books of account, bank statements or pass books, statements of account, vouchers, files and any other

necessary documents including accounting statements prepared under Regulation 31(1) hereof, for the inspection of the

accountant and shall afford to such accountant all other facilities which the accountant may consider necessary for

completing an inspection and report to the Council on the result of the investigation. Subject to the provisions of the

next succeeding sub-paragraph of this paragraph the solicitor shall be responsible for the costs and expenses of such

inspection and report if the Council determines that there has been a material breach of the Regulations.

(3) Before instituting an inspection on a written complaint lodged with it the Council shall require prima facie evidence

that a ground of complaint exists, and may require the payment by the person lodging the complaint of a reasonable

sum to be fixed by it to cover the costs of the inspection and the costs of the solicitor against whom the complaint is

made, and any sum not so applied shall be refunded to the person lodging the same."

(4) & (5) [not relevant]

The Law Society exercised a power granted by regulations which they had themselves made pursuant to powers conferred by

the Solicitors Act, 1954 and with the concurrence of the President of the High Court. It is bound to respect the limits imposed

expressly or impliedly by the governing statute and the regulations themselves. It has been determined that, in making its

decision, it pursued a purpose which was not authorised by the enabling regulations. The matter was approached in the High

Court on the basis that the Law Society was pursuing two aims of equal importance. If that is the correct approach, then it

made a decision which was designed, insofar as one of those aims was concerned, to pursue an unauthorised purpose.

The issue is essentially one of ultra vires. The delegates of statutory power cannot be allowed to exceed the limits of the

statute or, as here, the secondary legislation conferring the power. The rationale for this is simple and clear. The Oireachtas

may, by law, while respecting the constitutional limits delegate powers to be exercised for stated purposes. Any excessive

exercise of the delegated discretion will defeat the legislative intent and may tend to undermine the democratic principle and

ultimately the rule of law itself. Secondly, the courts have the function of review of the exercise of powers. They are bound to

ensure respect for the laws passed by the Oireachtas. A delegate of power which pursues, though in good faith, a purpose not

permitted by the legislation by, for example, combining it with other permitted purposes is enlarging by stealth the range of its

own powers. These principles, in my view, must inform any test for deciding whether a power has been exercised ultra vires.

Henchy J stated in Cassidy v The Minister for Industry and Commerce [1978] 1 I. R. 297:

"The general rule of law is that where Parliament has by statute delegated a power of subordinate legislation, the power

must be exercised within the limitations of that power as they are expressed or necessarily implied in the statutory

delegation. Otherwise it will be held to have been invalidly exercised for being ultra vires."

The present case is not one where some secondary or incidental advantage follows from the decision made. The impermissible

aim or purpose was clearly intrinsic from the outset. It is not necessary that it be dominant. The matter was well put in a

passage from de Smith’s Judicial Review of Administrative Action (5th ed at page 330, quoted by the learned trial judge:

"If power granted for one purpose is exercised for a different purpose, that power has not been validly exercised. ... the

person so authorised cannot be allowed to exercise the powers conferred on them for any collateral object, that is for

any purposes except those for which the legislature has invested them with extraordinary powers."

Although Glidewell J in R v Inner London Education Authority [1986] 1 All ER 19, in a passage also cited in the judgment under

consideration spoke of “the general problem of plurality of purpose as a ‘legal porcupine which bristles with difficulties as soon

as it is touched,” he formulated a simple and clear test for the resolution of the case before him, namely “whether in reaching

its decision......... ILEA was pursuing an unauthorised purpose, namely that of persuasion, which has materially influenced the

making of its decision.” (my emphasis) (see page 36).

The decision of Glidewell J was cited in the judgment of Higgins J in the case of In the Matter of an Application by Denis Gerard

Murray [1987] N.I.J.B. 1, which concerned the transfer by order of the Chief Constable of the RUC of four police officers who

had given what the Chief Constable considered to be untruthful evidence at a disciplinary enquiry. Higgins J found that, while

had had no doubt that the Chief Constable “was concerned to maintain the efficiency, integrity and reputation” of the police

force, one of his motives for the decision to transfer was to inflict punishment, which was admitted not to be a proper statutory

purpose. Since he considered that the Chief Constable had taken into account an irrelevant consideration, the decision was

invalid. (see page 19 of the judgment).

Mr Feeney for the Law Society cited in argument a passage from De Smith, Woolf and Jowell, Judicial Review of Administrative

Action (5th Edition Sweet & Maxwell. London 1995 pages 340 to 343) to suggest, using the expression later used by Glidewell J,

that the question of plurality of purposes is “a legal porcupine which bristles with difficulties..” Early in that passage the

expression “colourable device” appears in a citation of Westminster Corp. V London and North Western Railway [1905] A.C.

426. The local authority had constructed a public convenience under statutory powers. Because of its situation under a street

with a subway, it could be used as a means of passing under the street by members of the public who did not wish to use the

convenience. Lord Macnaghten stated (page 432) that “in order to make out a case of bad faith it must be shewn that the

corporation constructed the subway as a means of crossing the street under colour and pretence of providing public

conveniences which were not necessary at that particular place.” (my emphasis). Neither he nor any of the Law Lords said

that such a demonstration was necessary in order to invalidate an exercise of statutory powers. In the particular case, the

provision of a public passage under the street was an incidental consequence or side effect of the authorised construction of

the conveniences.

In the present case, the finding of the learned trial judge places the dual objectives of the appointing decision on an equal level

of importance. It is trite law that statutory powers must be exercised reasonably and in good faith and only for the purpose for

which they were granted. The pursuit of the impermissible objective was as important to the Law Society as the permissible

one. Such an exercise of delegated power cannot be allowed to stand.

Nor do I think the appointing decision can be rescued in part by severing the good part from the bad part. In Pigs & Bacon

Commission v McCarron, O’Higgins C.J. (at page 469) distinguished Cassidy on the ground that “the orders made by the

Minister stood and continued to operate to the extent and in the manner contemplated by the empowering legislation.” In

McCarron, the authority had made an order for the payment of a specified amount of levy and the Court could not rewrite that

by substituting a reduced levy:

The appointing decision in this case was a single one. It is not possible for the Court to sever it. I reach that conclusion for

three reasons. Firstly, it does not distinguish between the valid and the invalid purposes it purports to authorise. Thus it does

not lend itself to the sort of severance that occurred in State (McKeown) v Scully and Glencar Exploration plc v Mayo County

Council. Secondly, it is not possible to limit its prospective effect, which was possible in the unusual circumstances of Cassidy.

If an application for judicial review had been heard before the appointing decision had been acted upon, it might have been

possible for the Court to make an order limiting he investigation to be carried out. Even then, however, a question might have

arisen as to whether a decision so heavily influenced by an impermissible consideration should be allowed to stand: the Law

Society might not, it could have been argued, have made the appointing decision at all if it had not been influenced by its

concern about fraudulent claims. Thirdly, I think the decision should be quashed in any event, because the Law Society

engaged in a policy of deliberate concealment of its intentions, especially when, as this Court has held, the concealed intention

related to material which it was not authorised to investigate by means of the accounts regulations. In saying this, I am not

saying that the Law Society was acting mala fide, in the sense of knowingly exceeding their powers. That has not been claimed

in the present case other than by advancing the colourable device argument.

I would, therefore, set aside the decision of the Law Society to appoint the investigating accountant.

The issue then arises as to the further consequences of the invalidity of that decision. As it happens, the investigating

accountant has already reported to the Law Society. The Compensation Fund Committee, following a specially convened

meeting on 9th February 1996, at which Mr Kennedy attended, formed the opinion that there was evidence of misconduct

including serious breaches of the Solicitors Accounts Regulations which it considered warranted an enquiry by the Disciplinary

Tribunal of the High Court, to which the matter was thus referred. It is common ground that, in reaching this conclusion, the

Compensation Fund Committee considered the report of the investigating accountant.

As appears from the summary of the submissions of counsel for Mr Kennedy, it is claimed that it follows from any decision

setting aside the appointing decision, that the material gathered by the investigating accountant appointed by it cannot be

used against the applicant for any purpose, relying on the criminal-law cases referred to earlier in this judgment. Counsel for Mr

Kennedy acknowledged that no authority could be found for the application of this line of case law to administrative

proceedings of the type at present in issue. That line of cases depends for the basic proposition it lays down on a finding by

the Court that there has been a knowing and deliberate breach of the constitutional rights of the person against whom the

impugned evidence is to be tendered. It is clear, in particular, from the judgment of Finlay C.J. in The People (D.P.P.) v Kenny,

that the Court was motivated by the need, in the course of the criminal process, to adopt a rule which would act as a

sufficiently powerful deterrent against the abuse by the police arm of the State of the exceptional powers which they may

exercise, while engaged in the investigation of crime. The exclusionary rule is not based on concerns about the relevance or

probative value of the impugned evidence. Indeed, Finlay C.J. accepted (see page 134) that it suffered "from the marked

disadvantage that it constitutes a potential limitation of the capacity of the courts to arrive at the truth and so most

effectively to administer justice." The constitutional rights at issue are typically the right to liberty or the inviolability of the

person or of a dwelling. In the investigation of crime, the law confers on the police extensive powers, not normally possessed by

disciplinary or administrative tribunals, to encroach on such fundamental rights. I do not exclude the possibility that such a

situation may, depending on the facts of the case, calling for the application of those principles in the sphere of administrative

and in particular disciplinary hearings. But the scope for such situations to arise must necessarily be extremely limited. They do

not, in my estimation, arise here. The excess of statutory powers was not a trivial one, but it occurred in the course of the

conduct by the governing body of the profession of their supervisory role over solicitors. No comparison can be made with the

illegal and hence unconstitutional detention of a suspect or an unauthorised search of his person or of his dwelling. Mr Kennedy

has not identified any constitutional right of his which was affected by the investigation.

I turn then to the illegality attendant on the investigation. Here it is easier to find place for the application of the balancing test

proposed by Kingsmill Moore J. He stressed the need to have regard to all the circumstances. He was essentially, however,

considering the public interest just as was Finlay C.J. in the Kenny case. Was the obtaining of the evidence whose admissibility

is at issue attended with such circumstances of illegality that it would unconscionable to allow the authority to use it? The

questions which Kingsmill Moore J posed to himself suggest that a comparatively serious case of intentional illegality has to be

established. I agree that an element of deliberate and knowing misbehaviour must be shown, before evidence should be

excluded. It is not possible to unknown something already known. The courts should be slow to adopt any mechanical

exclusionary rule which makes it easy to prevent disciplinary tribunals from receiving and hearing relevant and probative

material. The balance should be struck between the rights of individuals and those professional bodies assigned the task of

supervising their behaviour so as to give careful weight to two competing considerations: firstly, the test adopted should not

unduly impede the latter types of body from performing their duty of protecting the public from professional misbehaviour;

secondly, members of professional body should be protected from such clear abuse of power as would render it unfair that the

evidence gathered as a result be received.

It is necessary, in this case, to have particular regard to the regulatory scheme of which the investigation and report form a

part. According to Regulation 29, quoted above, the investigating accountant is to report to the Council of the Law Society.

The Compensation Fund Committee is, by virtue of a decision of the General Council of the Law Society of 16th October, 1992,

delegated with the powers of the Council under the Solicitors Accounts Regulations, as explained in the judgment of Kearns J in

the High Court. Hence, the accountant's report must be taken as having been made to the Law Society. The appointing

decision and the report of the accountant are inseparable parts of the process.

One of the circumstances which I believe had a particular influence in the present case was the concealment by the Law

Society of the so-called “hidden agenda”, namely the investigation of fraudulent claims. The learned High Court judge has given

an account of the hearing of an interlocutory injunction application brought by the Law Society before Costello J at the end of

July 1993. That learned judge granted an interlocutory injunction against Mr Kennedy requiring him to produce all files and other

documents required. However, the argument on behalf of Mr Kennedy was limited to the question of the privilege attaching to

client files. Kearns J found that he had no real opportunity of addressing other issues. In reality, the “hidden agenda” had not

been admitted by the Law Society at that stage. Costello J was not informed that the Law Society were engaged in an

investigation of the pursuit of fraudulent claims. The absence of this knowledge deprived Mr Kennedy of the opportunity to ask

the court to order the Law Society to desist from continuing that aspect of the investigation. If he had been in a position to

challenge that part of the investigation, the accountant's report would not have contained any material about the processing of

spurious claims. That factor weighs heavily in the scales against permitting the Law Society to use the report of the

accountant, as it stands:

Furthermore, I think the report of the accountant is an integral step in the regulatory procedure. If the appointment of the

accountant was invalid, as I think it was, then the report of the accountant on her investigation was unauthorised, though part

of the material contained in the report could legitimately have been gathered. While, as was pointed out at the hearing of the

appeal, a report, being the product of an inquiry, cannot be quashed as if it were a decision, I think it is indissociable from the

decision of the Compensation Fund Committee based upon it, which I think should be quashed. The Committee clearly had the

entire report before it. It is not necessary to make any further order at this stage. The order I propose does not prevent the

Committee from making a new decision based on evidence properly gathered. Accepting as I do, by analogy, the approach

outlined by Kingsmill Moore J to the use of illegally obtained evidence in criminal cases, I do not think that, in the absence of

evidence of deliberate and knowing abuse, it inhibits a professional disciplinary body from relying on evidence, which could have

been lawfully acquired but was in fact gathered as a consequence of a decision rendered invalid by the contemporaneous

pursuit of an unauthorised purpose. On the other hand, for the reasons already given, I do not believe that the Law Society

should be permitted to rely on the evidence of the processing spurious claims.

Finally, the Court has already reserved to the High Court any question of damages to be paid to Mr Kennedy arising from the

appointment and investigation of the accountant. For the elimination of all doubt, it should be emphasised that nothing in this

judgment implies that any entitlement to damages flows from the invalidity of the appointing decision. The High Court will

consider that matter in the light of the general law including the recent decision of this Court in Glencar Exploration plc v Mayo

County Council (Unreported 19th July, 2001).