Supreme Court allows appeal against striking out summonses for breach of Companies Act annual return filing obligations.

THE SUPREME COURT

Murray C.J.

Hardiman J.

Geoghegan J.

145/03

The Registrar of Companies

Applicant / Appellant

-v-

Judge David Anderson and System Partners Ltd

Respondents

Judgment of Murray C.J. delivered on the 16th day of December, 2004.

1. This is an appeal by the applicant / appellant, the Registrar of Companies, from a refusal of the High Court to grant his application

for an order of certiorari by way of judicial review of a decision of the first named respondent made on 25th June, 2002 in the District

Court when he struck out two summonses which had been issued by the appellant against the second named respondent company for

breach of s. 125 of the Companies Act, 1963 by failing to file annual returns for the said company within the times specified in the Act

for the calendar years 2000 and 2001.

2. It is not in dispute that the second respondents (hereafter the company) failed to file their annual returns as required by s. 125 of

the Companies Act, 1963. As a consequence the company was prosecuted for its failure to make the returns pursuant to that

section.

3. Subsequent to the issuing of the summonses for the said prosecution, and before the matter came for hearing before the District

Court, the company filed its annual return in respect of each of the years in question.

4. Because it was late in filing its returns, the company had to pay to the Registrar a significantly higher fee with the return than

would have been the case if it had filed the returns by the due date. The fee payable by a company, if it files its annual return on

time, is €30.00. However, by virtue of the Companies (Fees) Order, 2001, (S.I. 477/2001) the company was required to pay a fee

with the late filing of the annual returns higher than the normal €30.00. The company did not file its annual returns for the years 2000

and 2001 until June 2002 and therefore were subject to the late filing fees imposed by the aforesaid order. Those fees amounted to

€1,200.00 in respect of the year 2000 and €379.00 in respect of the year 2001.

5. Subsequent to the late filing of the returns and the payment of the associated late filing fees, the prosecution by the appellant of

the company for failing to make their returns came before the District Court on June 25th, 2002.

6. At that hearing it was drawn to the attention of the first named respondent that the company had already filed the returns in

question, albeit late, and paid the associated late filing fees which were far in excess of what would have been payable if the returns

had been lodged in good time.

7. It would appear that the first named respondent raised a question whether, in the circumstances where the company had already

undergone a penalty of paying the increased fees, the subsequent prosecution of the company pursuant to s. 125 of the Act of 1963

“amounted to, or exposed the second named respondent to the risk of double jeopardy …” The quotation is taken from the

unchallenged affidavit filed on behalf to the appellant in support of the judicial review application. As appears from that affidavit the

District Judge then concluded that there was a risk that the prosecution before him involved a ‘double jeopardy’ for the company and

therefore should be struck out. Accordingly, there was no determination on its merits of the prosecution brought against the

company.

8. The issue in the case is whether the learned District Judge exceeded his jurisdiction in refusing to hear the case and in striking out

the summonses on the grounds that to proceed with the prosecution would offend against the principle of double jeopardy.

Relevant Statutory Provisions

9. Section 125(1) of the Companies Act, 1963 as amended by s. 29 of the Company Law Enforcement Act, 2001 provides:-

“Every company shall, once at least in every year, subject to s. 127, make a return to the Registrar of Companies, being its

annual return, in the prescribed form.”

10. Section 125(2) states:-

“If a company fails to comply with this section, … the company and every officer of the company who is in default shall be

guilty of an offence …”

11. Section 125(3) states:-

“Proceedings in relation to an offence under this section may be brought and prosecuted by the registrar of companies.”

The High Court Order

12. The company was not represented in the High Court, nor has it chosen to be represented in this appeal, no doubt for its own

good reasons. This court has available to it a brief approved note of the judge’s ruling in the High Court. The learned High Court judge

questioned whether there was a difference between a criminal sanction and an administrative section, both arising out of a breach of

statute. Counsel for the Appellant relied on the case of McLoughlin –v- Tuite, The Revenue Commissioners –v- The Attorney General

in which, to put it in broad terms at this stage, the distinction between an administrative sanction and a penal sanction was

recognised.

13. The learned High Court distinguished the McLoughlin case from the present case on the basis that double jeopardy was not an

issue in the McLoughlin case as there was no power in the income tax legislation to prosecute as well as impose a penalty. His

concern was that this particular offence gives rise to a criminal sanction when there is already a sanction in place. He concluded that

the second named respondent was correct and refused the relief sought.

Submissions of the appellant

14. On behalf of the appellant it was submitted that the late filing fee is neither in form nor in substance a criminal penalty but is

rather in the nature of the civil or administrative sanction imposed for failing to file the annual return of a company in a timely fashion

as required by the act. The object of the late filing fee and the accumulative daily fee is designed to promote and encourage the

timely filing of annual returns for the current year. Since its purpose is administrative it was submitted that the payment of the late

filing fee does not preclude the appellant from proceeding with a prosecution pursuant to s. 125 for the offence of failing to file a

return within the prescribed time. The late filing fees have no relationship with the prosecution and so far as they are relevant at all

they are relevant only to issues of mitigation in respect of any fine to be imposed for the actual offence. It was further submitted

that the principle of double jeopardy could not be invoked in favour of the company in a prosecution before the District Court unless

the filing fee is determined to be in the nature of a criminal penalty. The principle of double jeopardy does not apply simply where

there is an overlap between the criminal law on the one hand and the civil law on the other.

15. Counsel for the appellant also submitted that the courts have considered in a number of cases the characteristics which

distinguish civil matters and rely, inter alia, of the decisions of this court in Melling –v- O’Mathghamhna [1962] I.R. 1 and McLoughlin –

v- Tuite [1989] I.R. 82. It was submitted that this case law supported the appellants’ contention that the imposition and collection of

fees imposed only because of the lateness of the filing of the return of the company was not capable of being considered a criminal

penalty in which case the principle of double jeopardy had no application.

Decision

16. As regards the question as to whether the imposition of late filing fees were both in form and substance purely administrative, I

consider first of all the formal nature of the obligation to pay late filing fees. The companies’ registration office has a regulatory

responsibility for many tens of thousands of companies. Receiving and dealing with the annual return from each of them must be a

formidable administrative task and no doubt there is in place management procedures and structures to deal with them. It is also self-

evident that it is in the interest of good and efficient administration that annual returns from companies are filed in time within the

due date laid down by law. In an ideal world all such returns should be made in time and it seems to me a legitimate administrative

objective to seek, by administrative means, to encourage timely filing of returns and discourage late ones. It is by no means an

unfamiliar administrative phenomenon for incentives to be provided so as to encourage such matters as the timely payment of bills or

the making of reservations in relation to a particular event, or, to discourage late payers or late compliers with a deadline specified in

relation to a particular matter, by charging higher or additional fees.

17. In this case the liability to pay higher fees is an automatic consequence to the objective fact of a certain statutory deadline

having passed. The amount or amounts are fixed and there is no discretion. It is a foreseeable, objective and automatic consequence

for lateness in filing an annual return by any company. It is clearly designed to encourage timely filing and discourage the dilatory.

That is something which is clearly in the interest of good and efficient administration.

18. It is manifest that the statutory requirement to pay late filing fees is not in any sense something which involves a criminal process

let alone a criminal prosecution.

19. Therefore, from a formal point of view I have no hesitation in concluding that the obligation to pay extra fees for a later return of

a company’s annual report is in form an administrative sanction. That is to say a sanction that does not have as its purpose the

punishment of an offence but the achievement of a legitimate administrative objective.

20. It may not necessarily follow that something which is in the form of an administrative sanction for failing to comply with a

statutory obligation could never be considered to be in substance a criminal penalty. It might be argued for example that a sanction

which was so excessive and disproportionate to the administrative objective to be achieved was in substance if not in form the

imposition of a criminal penalty. I do not think it is necessary to decide whether the imposition of the late return fees in this case

could, even arguably, (which I doubt), be considered as being in substance the imposition of a criminal penalty. The reason is that if

the late return fees could be classed as the imposition of a criminal penalty, then it would be one which was imposed outside the

criminal process automatically and without discretion. Then it is the relevant statutory provisions imposing such fees which would be

open to challenge by reason of the fact that it did not involve a criminal process, with all the due process constitutional protections

that the latter would entail.

21. In this case the company were not charged with any offence, no decision or judgment was made by any person or body

concerning the individual company, there was no trial of any issue and of course there was no conviction or acquittal.

Double Jeopardy

22. It has for a long time been a principle of the common law that a person cannot be prosecuted and punished for an offence of

which he has already been acquitted or convicted. This is commonly referred to as the rule against double jeopardy. It is a rule which

applies to the prosecution for criminal offences. The rule, or what also might be called the notion, of double jeopardy is not normally

relied upon in express terms in the sense that if a person is prosecuted for an offence arising out of the same breach of the law or

the same essential ingredients for which he has previously been tried and either convicted or acquitted, his defence to the second

prosecution will be based on the pleas of autrefois acquit or autrefois convict. If either plea is successful the prosecution may

proceed no further. I suppose if a prosecution was initiated against a person for an offence for which he had previously been

prosecuted and was awaiting trial, he or she might well invoke the rule of double jeopardy in a general sense but the fundamental

basis for resisting the second prosecution would be grounded more on an abuse of process or that the court concerned with the

second prosecution had no jurisdiction to deal with the matter when another Court was already seized with an existing prosecution for

the same offence.

23. However one approaches it, the fundamental point is that the rule of double jeopardy and associated protections against being

prosecuted twice for the same offence is a rule which arises in relation to the prosecution of offences.

24. The only criminal process with which the company in this case is concerned with is that which arises out of the two summonses

before the District Court. There is and there was not at any time any other criminal process or criminal prosecution.

25. Since there was no other criminal process, no charge, no trial of guilt or innocence, the question of double jeopardy in relation to

the District Court prosecution could not arise.

26. In that sense the approach of the District Court Judge was misconceived.

27. That is the only prosecution which has been brought against the company at any stage.

28. If the company feel aggrieved that the administrative process by which they were required to pay late entry fees imposed a

criminal penalty in denial of their constitutional rights, then it has been open to them to challenge that statutory consequence. But

that is a different matter to be taken up in different proceedings.

29. A District Judge must proceed on the basis of the presumption of constitutionality of an act of the Oireachtas. Accordingly, there

having been no prior criminal prosecution, no charge, no conviction or acquittal, the second named respondent was incorrect in

holding that the prosecution pending before him was affected by the question of double jeopardy. Accordingly, I conclude that he

was wrong in law in striking out the summonses and in failing to hear and determine the proceedings brought on foot of them.

30. For the reasons stated I would allow the appeal and set aside the order of the District Judge striking out the summonses and

make the necessary order requiring him to hear and determine the matters before him.