Supreme Court allows appeal against cooperation restraint order, rejecting mandatory undertaking requirement where respondent is already convicted and confiscated in UK.

THE SUPREME COURT

Record No.: 147/07

Hardiman J.

Fennelly J.

Finnegan J.

O'Donnell J.

McKechnie J.

IN THE MATTER OF THE CRIMINAL JUSTICE ACT, 1994 SECTION 46(6)

IN THE MATTER OF THE CRIMINAL JUSTICE ACT, 1994 (SECTION 46(6)) REGULATIONS 1996

IN THE MATTER OF CRIMINAL PROCEEDINGS PENDING BEFORE THE COURTS OF THE UNITED KINGDOM AGAINST BERNADETTE

MARGARET ROSE DEVINE

IN THE MATTER OF A REQUEST SENT BY THE HOME OFFICE ON BEHALF OF THE SOLICITORS OFFICE OF HM CUSTOMS AND

EXCISE.

BETWEEN:

THE MINISTER FOR JUSTICE EQUALITY AND LAW REFORM

Appellant/Applicant

-and-

BERNADETTE MARGARET ROSE DEVINE

Respondent

JUDGMENT of O’Donnell J. delivered the 26th day of January 2011.

1 On the 7th March, 2005, the High Court (Quirke J.) granted to the Minister herein (“the Minister”) a cooperation restraint order

pursuant to the Criminal Justice Act 1994 (Section 46(6)) Regulations 1996) in respect of 12 identified properties and assets then

located in Ireland. The respondent at that time had been the subject of a prosecution in the United Kingdom in respect of VAT fraud.

In 1999, a restraint order had been made in that jurisdiction encompassing six of the classes of property located in Ireland which were

the subject matter of the 7th March, 2005 order. That order operated against the respondent in personam.

2 In July 2001 the respondent had been convicted in England on five counts of fraudulent evasion of VAT. A post conviction

confiscation process was commenced. On the 5th August, 2003, Middlesex Crown Court made a determination that the respondent

had benefited from the fraudulent VAT scheme to the value of £18,759,430. A confiscation order was made against the respondent in

the sum of £1,446,368.68. The respondent lodged an appeal against conviction and was refused leave to appeal. In July 2004 she

sought to appeal the confiscation order. At the time of the application before Quirke J., her application for leave to appeal had been

adjourned pending the outcome of another decision in the House of Lords. In 2005, the respondent withdrew her appeal and the

English confiscation order became final.

3 In June 2006, and accordingly at a time when both the Respondent’s guilty and the confiscation of her assets had been conclusively

determined as a matter of English law, the High Court (O’Sullivan J.) heard and determined the Respondent’s application to set aside

the ex parte order granted in March 2005 by Quirke J. The sole ground asserted was that no undertaking as to damages had been

provided (or required) in the High Court which, it was argued, rendered the order ultra vires. O’Sullivan J. held that the court ought to

have required an undertaking as to damages but that the absence of such an undertaking did not invalidate the order. In a rather

curious procedure, the High Court then required an undertaking as to damages although limited to the actions of the Minister and not

extending to those of the requesting authority. It also appears that the same undertaking was required as a condition of continuing

the ex parte order.

The Criminal Justice Act 1994

4 The Criminal Justice Act 1994 introduced into Irish law the offence of money laundering and made provision for post conviction

confiscation and forfeiture orders in domestic proceedings. The Act gave effect to Ireland’s obligations under the Council of Europe

Conventions on Mutual Assistance in Criminal Matters (COE 1957) Laundering, Search, Seizure and Confiscation of the Proceeds from

Crime (COE 1990). These were substantial additions to the field of criminal law in Ireland. But since drug trafficking and money

laundering were international phenomena, and beyond the power of an individual state to control, the Act also made provision for

confiscation and forfeiture orders that could be made in the Irish courts in aid of orders made in the courts of designated states, and

also made provision for reciprocal requests on the part of Irish law enforcement agencies for such orders to be made in the courts of

designated states in aid of Irish prosecutions.

Restraint Orders

5 While it is important, after final conviction and confiscation or forfeiture, that law enforcement agencies of any country can enforce

confiscation and forfeiture orders in respect of property located abroad, the scheme would be a very ineffective measure in

combating crime generally, and money laundering in particular, if the authorities were forced to await a final conviction before moving

to secure property and funds in any relevant jurisdiction. Accordingly, under the Act there is provision for the making of restraint

orders at the initiation of a domestic criminal prosecution so that property might be available in the event that confiscation or

forfeiture orders were made. Section 46(6) of the Act addressed the situation where there was a prosecution pending in another

designated state and, through the somewhat unusual mechanism of providing for the making of regulations which could adapt and

modify the Act, made provision for the possibility of provisional measures such as restraint orders being available in Irish courts.

Section 46(6) provides as follows:-

“The Government may by regulations make such modifications of this Act as appear to it to be necessary or expedient

for the purpose of adapting to confiscation co-operation orders any of the provisions of this Act relating to confiscation

orders, in particular in relation to enforcement and the taking of provisional measures to prevent any dealing in, or

transfer or disposal of, property that may be liable to confiscation in accordance with any confiscation co-operation

order that may be made.”

6 In pursuance of the power granted under s. 46(6), the Regulations of 1996 (S.I. No. 343/1996) were introduced. The Regulations

provide, inter alia, for the making of a restraint order. Under the adapted s. 23, such an order may be made when proceedings have

been instituted in the courts of another designated state, or if the court is satisfied that proceedings are about to be instituted in a

designated state and there are reasonable grounds for thinking that an application be made for a confiscation cooperation order in

connection with the said proceedings. In such circumstances, the adapted s. 24(1) provides:-

“The High Court may by order (in this Act referred to as a ‘restraint order’) prohibit any person from dealing with any

realisable property, subject to such conditions and exceptions as may be specified in that order.”

By adapted s. 24(4) it is further provided that a restraint order:-

“may be made on an application by or on behalf of the Government of a designated country, with the consent of the

Minister, which may be made ex parte and otherwise than in public.”

Section 24(6) as adapted, provides that “an application for the discharge or variation of a restraint order may be made by any person

affected by it.”

7 This was the procedure which was followed, broadly, in this case. An ex parte order was made by Quirke J. and an application to

discharge an order was heard by O’Sullivan J. By the time that the case reached this Court (and indeed at the time of the hearing

before O’Sullivan J.), matters had developed to the point where the final confiscation order had been made in England. There was also

pending in the High Court an application for the confiscation cooperation order. Furthermore, both the Act of 1994 and the

Regulations of 1996 had been repealed by the provisions of s. 10 of the Criminal Justice (Mutual Assistance) Act 2008 (“the Act of

2008”).

8 The Act of 2008 was a comprehensive provision introduced to give effect to the provisions of a number of Conventions and the

Council Framework Decision 2003/577/JHA of 22nd July, 2003, on the Execution in the European Union of Orders Freezing Property or

Evidence. The central authority, in this case the Minister, is obliged on receipt of an external freezing order by s. 35 of the Act of

2008 to “forthwith cause an application to be made to the High Court for an order…recognising the external freezing order and

prohibiting any person from dealing with the property specified in the external freezing order”. It is provided in s. 35(2) and s. 35(3)

that the application “may be made ex parte and otherwise than in public” and should “be dealt with as soon as possible and whenever

practicable, within 24 hours of receipt of the order and a duly completed certificate.” Under s. 35(4) the court may make such an

order “subject to any conditions that may be specified in the order”. Section 35(5) applies the general though limited grounds set out

in the Act of 2008 for refusal to make a cooperation order, and s. 46 sets out specific grounds for refusal to make a freezing

cooperation order.

9 On this appeal it was argued that the application in the High Court for confiscation was now governed by the Act of 2008 pursuant

to the transitional provisions in that Act. There was also some discussion as to whether the Act of 2008 permitted the Minister to

seek some sort of reciprocal undertaking from the requesting state as a condition of seeking to enforce a freezing order. However,

since the application here was made under the Act of 1994 and the Regulations of 1996, I think it is preferable to address the

arguments made by reference to that scheme. It may be possible to extrapolate from the conclusions of this case to the scheme

under the Act of 2008, but it is in my view essential to focus on the precise facts and law which apply to this case.

10 It is worth observing that the provisions in relation to the making of a restraint order under s. 24, as adapted by the 1996

Regulations, are both detailed and complicated. On their face, they could give rise to some extensive legal argument. When regard is

also had to the requirements of proof, which may involve proof of events which occurred in another unfamiliar jurisdiction, and the

interaction of the Regulations and the Act of 2008, it is obvious that the scope for contention, and indeed for purely technical error,

in the execution and enforcement of freezing orders is not insignificant. One issue which arises in this appeal is the extent to which an

accused person the subject matter of a restraint order should be entitled to claim damages in the event that an order miscarries on

some technical basis, albeit that it may be quite clear that the funds in question ought properly to have been available for a

confiscation order.

The Minister’s Contentions

11 In this case, the Minister’s argument is that there was no absolute rule that required him to give an undertaking as to damages

when seeking a restraint order under the Regulations of 1996. While the Minister conceded that the court had a discretion to require

such an undertaking in certain circumstances, the normal rule should be that no such undertaking should be required, at least where

the Minister was a state body performing a public duty. The Minister conceded that an undertaking should be required where the

State was seeking to protect a private or proprietary interest. He relied heavily on the reasoning of the House of Lords in Hoffmann

La Roche & Co. v. Secretary of State for Industry [1975] A.C. 295 and Kirklees Metropolitan Borough Council v. Wickes Building

Supplies Ltd. [1993] A.C. 227.

12 In Hoffmann La Roche, the House of Lords had occasion to review the practice of the United Kingdom courts by which the Crown

had never been required to give an undertaking as to damages on the grant of an injunction. This was a practice recognised in

Attorney-General v. Albany Hotel Company [1896] 2 Ch 696. The roots of the practice were undoubtedly to be found in the concept

of deference to the sovereign in his or her own courts, something which could have no application in this jurisdiction. However, the

significance of the decision in Hoffmann La Roche was that the court had to review the position in the light of the Crown Proceedings

Act 1947, which substantially removed the Crown’s immunity from suit, and the Court was therefore required to consider whether

there were grounds of policy, separate from any theory of the status of the sovereign, for not requiring the Crown authorities to

provide an undertaking as to damages. The approach taken by the Court was entirely functional. Did the function which the Secretary

of State was discharging, rather than his position in constitutional theory as a representative of the sovereign justify any departure

from the practice of non-provision of an undertaking?

13 The facts of the case were that Hoffman La Roche were the patent holders and manufacturers of a popular and widely prescribed

benzodiazepine. The cost to private patients and to the Health Service was significant. The Monopolies Commission reported on the

level of profits being made by the companies producing and selling certain patented tranquilizing drugs. After debate and

investigation, both Houses of the Parliament approved the order of the Secretary of State setting the maximum price at which the

drugs could be sold. Hoffman La Roche informed the Secretary of State that they would not obey the order and brought proceedings

claiming declarations that the procedures adopted by the Monopolies Commission were contrary to the rules of natural justice, and

consequently, that the maximum price order was ultra vires and invalid. The Secretary of State sought an injunction to compel

Hoffman La Roche to comply with the provision of the order. The company defended the motion and offered an undertaking that if

they were permitted to continue to sell the drug at the higher price, they would set aside the difference between that price and the

price imposed by the order and agree to pay it back in the event that their proceedings were unsuccessful. Hoffman La Roche

maintained that the Secretary of State should be required to give an undertaking as to damages in the event of the granting of an

interlocutory injunction.

14 The House of Lords (Lord Wilberforce dissenting) held that since the Crown Proceedings Act 1947, the former rule of practice

whereby the Crown was never required to give an undertaking in damages was no longer justified. But in a case where the Crown

sought by injunction to enforce what was prima facie the law of the land, as opposed to its proprietary rights, the person against

whom the injunction was sought was obliged to show very good reason why the Crown should be required to give an undertaking. The

court held that in determining whether there was such good reason, all the circumstances were to be taken into account including

the Crown’s financial interest in the case; the consequences for the public of granting or refusing the injunction; the scheme offered

by the company; the likelihood of the order being held to be ultra vires; the fact that the Minister’s contention was not that what

they were doing was not prohibited by the order, but that rather the order was invalid; and the fact that the injunction was the only

means available to the Crown of enforcing the order. In all the circumstances, it was held that the Secretary of State was entitled to

the injunction without being required to give an undertaking of the damages.

15 In Kirklees Metropolitan Borough Council, the principle identified in Hoffman La Roche was applied in the context of the local

authority seeking to enforce a regulation which was alleged to be invalid as a quantitative restriction prohibited by the provisions of

what was then Article 30 of the Treaty Establishing the European Economic Community (EEC) 1957. The provision in question was s.

47 of the Shops Act 1950 which imposed restrictions on Sunday trading. A number of major retailers challenged the law and sought to

contend that they were entitled to continue to trade on a Sunday. Kirklees Metropolitan Borough Council, in common with a number

of other local authorities who were obliged to enforce the law within their functional areas, sought injunctions restraining Sunday

trading. Once again, the issue of an undertaking as to damages arose. The local authorities frankly admitted that they could not

afford to offer undertakings to major retailers who were trading in apparent breach of the section, since even if the risk of the retailer

succeeding was small, the potential damages would be enormous, and no prudent authority could expose itself, and its rate payers, to

such a risk.

16 The House of Lords held that there was no absolute rule that the Crown was exempt from giving a cross-undertaking in damages in

law enforcement proceedings. However, the court had a discretion not to require the undertaking and the discretion also extended to

other public authorities exercising the function of law enforcement in appropriate circumstances, and that subject to the impact of

community law the courts should have exercised that discretion.

In this case, it was argued that the Hoffman La Roche reasoning was in principle capable of application in this jurisdiction, since the

Minister is performing the same law enforcement function as his or her counterpart in England, albeit under a quite different

constitutional order, and it was the function, and not the constitutional status of the actor, which justified the court in not requiring

an undertaking.

The Respondent’s Arguments

17 The respondent in this appeal contended that there was a general rule that an undertaking as to damages had to be offered as

the sine qua non for the grant of an injunction and that there was no reason for treating the State differently in that regard. Counsel

accepted that this was an argument based essentially on a principle of equality, but also relied on the protection of property rights.

Although it appears from the judgment of the High Court that what was described as the common law position had been accepted by

both parties, counsel for the respondent argued in this court that Hoffmann La Roche, which he sought to characterise as part of the

outdated concept that the King could do no wrong, should not be followed in Ireland. In essence, his case could be reduced to two

simple but powerful statements of principle. First, he contended that there was no reason why the State should receive different

treatment in the courts than any other litigant seeking an order freezing property; indeed, there were powerful reasons which required

the State to be treated in exactly the same way as its citizens in that regard. Second, there was no reason why an individual who

had suffered loss and damage as a result of an injunction wrongly granted should not be able to recover that loss and damage. Again

it was argued that there were indeed strong reasons of principle why the State, above all, should be liable to make good any such

loss. Counsel pointed to the provisions of the Proceeds of Crime Act 1996 in this jurisdiction, and its United Kingdom counterpart in

2002, which made provision for compensation when an interim or interlocutory order lapses or is discharged. He also referred to, but

did not open, the compensation provisions provided for under s.65 of the Act of 1994 which applied to domestic restraint orders. He

suggested that these provisions were a statutory recognition of the necessity of providing something akin to an undertaking as to

damages.

18 As the argument in this Court proceeded, counsel sought to emphasise the narrowness of his contention. He said that he was only

arguing for an undertaking as to damages in the case of an interim order. At what he described as “the interlocutory stage”, the other

side could be heard, and there was less of a requirement for the protection of an undertaking as to damages. (It should be noted that

the Act of 1994, as adapted by the Regulations, does not contemplate an interlocutory stage. Rather the Regulations provide for an

ex parte order enduring until the confiscation hearing, but with the possibility of an application to set it aside. However, there is little

doubt, that as part of its general discretion on the grant of the ex parte order, a court could, as indeed the High Court here did, limit

the duration of the ex parte order and interlocutory hearing).

19 Counsel also suggested that the undertaking was not necessarily required as a condition of the grant of an injunction. He said that

the undertaking must be offered, but the court had discretion whether or not to accept it, and there were cases in which a court

could refuse to do so, although he did not identify either the cases, or the principle which would permit the court to refuse to accept

an undertaking proffered. On the other hand, while counsel speculated about a number of hypothetical cases in which loss might be

suffered, he was unwilling to identify with any degree of precision the circumstances in which a claim on the undertaking as to

damages might properly arise. The argument was put in an abstract way: if there was no possibility of substantial damage flowing

from an order there could be no difficulty in providing an undertaking; if there was such a possibility it was all the more important that

such damage should be compensated.

20 This type of argument by analogy with extreme hypothetical cases, and by invocation of principles of broad application, may have

some merits, but it must be said that it is rare that cases are determined by sweeping and generalised arguments such as these. Most

cases are not so simple. They almost always require clarity as to the basic facts and argument, precision both as to the formulation

and analysis of the issue, and nuanced judgment. On any analysis, it is apparent that this case is much more complex than the

argument of the respondent would admit.

21 It must be apparent that the qualifications to the argument introduced by the respondent were fatally at odds with the principle

asserted by him. If the court is not obliged to require an undertaking as to damages from the State at the ‘interlocutory’ stage, then

that suggests that the State may properly be treated quite differently to other litigants from whom such an undertaking is required at

that stage just as much as at the interim stage. Similarly, if the court has discretion not to accept an undertaking as to damages

from the State at the ex parte stage, then that suggests that different considerations apply to an application for an order restraining

disposal of assets when it is made by the State rather than a private citizen. Yet no principle was articulated to explain these

qualifications and no explanation is offered as to how a general principle of equality of treatment of litigants remains intact as a useful

basis for decision once these qualifications are admitted.

22 There is, furthermore, every reason to doubt the major premises of the Minister’s argument. First it is apparent, that even in a field

of interlocutory injunctions, there is no rule that an undertaking as to damages must be given in order to secure the grant of

interlocutory injunction. The well known practitioner’s text Bean & Parry, Injunctions (9th ed., Sweet and Maxwell, 2009) states

explicitly at p. 35 that “[t]he Court has a discretion to grant an interim injunction without requiring an undertaking in damages.”

23 The cases identified in that text in which an undertaking is dispensed with include not only those where the Crown applies for an

injunction to enforce what was prima facie the law of the land (Hoffman La Roche etc.) but also extends to a situation where, for

example, the United States Securities and Exchange Commission sought an injunction in the United Kingdom in support of proceedings

against alleged fraudsters in the United States (United States Securities and Exchange Commission v Manterfield [2010] 1 W.L.R.

172). An undertaking was not normally required in matrimonial and domestic proceedings concerning personal conduct, however where

an injunction was sought in a family case restraining the disposal of a property alleged vested in a third party, an undertaking in

damages was required (W v H [2001] 1 All E.R. 300). Perhaps even more significantly, it is well established that a court can give an

injunction notwithstanding the fact that the undertaking as to damages is of little or no worth because of the lack of means of the

Minister (Allen v Jambo Holdings Ltd. [1980] 1 W.L.R. 1252). It would clearly be wrong that the deserving plaintiff with a good claim

would be denied an injunction simply because they were without assets. In such a case the court must take into account the

unlikelihood of such a party being able to satisfy an undertaking as to damages as one of the factors in considering the grant of an

interlocutory injunction but may, and on occasion does, proceed to grant an injunction in such circumstances without such an

undertaking. Finally, it is generally the case that an undertaking as to damages will not extend to protect the interests of third

parties.

24 The picture which emerges, therefore, is not of a mechanical rule, but rather of the exercise of the discretionary jurisdiction in

which the presence or absence of an undertaking as to damages may be significant, and in many cases decisive. Even in those cases

in the United Kingdom which deal with the enforcement of law by public authorities, it is acknowledged that the court still retains the

power to demand an undertaking as a condition of the grant of an injunction, and in a close case may refuse an injunction because of

the absence of such an undertaking. In other cases, the court may take other steps to minimise or limit the potential harm to the

party restrained, whether by limiting the period during which the ex parte injunction is operative or providing for a very early trial. For

present purposes, however, it is apparent that there is no absolute rule requiring the provision of an undertaking as to damages. The

authorities relied on by the Minister in this case therefore are not unique; rather, they are examples of circumstances in which the

court in its discretion may not require the provision of an undertaking as to damages. This is entirely consistent with the exercise of

an equitable jurisdiction, but it makes more difficult the argument that there is an absolute general rule from which the State is being

exempted.

The Significance of Section 65 of the Criminal Justice Act 1994

25 This is not a case of the exercise of the equitable jurisdiction to grant an injunction in aid of the private law cause of action, or

even in the enforcement of the general law. The jurisdiction here is entirely statutory and the true question is a matter of statutory

construction. In the absence of any express provision in the 1996 Regulations in relation to undertakings as to damages, must the

words of the adapted s. 24 – “the Court may…subject to such conditions and exceptions” – be interpreted to require that an

undertaking as to damages be provided as a condition of the issuance of a restraint order in every case? To pose this question is

almost to answer it. In the absence of express language it is unlikely that the Act can possibly be construed to include a specific

obligation on a court to demand a general undertaking as to damages. If that was what the Act intended, it would have been easy to

so provide in explicit terms.

26 The statutory compensation provisions to which counsel for the respondent referred us, are also instructive in this regard, but I

would draw an entirely different conclusion from them than that which counsel suggests. The provisions of s. 16 of the Proceeds of

Crime Act 1996 are as follows:-

“Where:-

(a) an interim order is discharged or lapses and an interlocutory order in relation to the matter is not made or, if made,

is discharged (otherwise than pursuant to section 3 (7)),

(b) an interlocutory order is discharged (otherwise than pursuant to section 3 (7)) or lapses and a disposal order in

relation to the matter is not made or, if made, is discharged,

(c) an interim order or an interlocutory order is varied (otherwise than pursuant to section 3 (7)) or a disposal order is

varied on appeal,

the Court may, on application to it in that behalf by a person who shows to the satisfaction of the Court that—

(i) he or she is the owner of any property to which—

(I) an order referred to in paragraph (a) or (b) related, or

(II) an order referred to in paragraph (c) had related but, by reason of its being varied by a court, has ceased to relate,

and

(ii) the property does not constitute, directly or indirectly, proceeds of crime or was not acquired, in whole or in part,

with or in connection with property that, directly or indirectly, constitutes proceeds of crime, award to the person such

(if any) compensation payable by the Minister as it considers just in the circumstances in respect of any loss incurred by

the person by reason of the order concerned.

(2) The Minister shall be given notice of, and be entitled to be heard in, any proceedings under this section.”

27 It will be noted that compensation is only available to the owner of the property and then only when the property does not

constitute the proceeds of crime. Further, compensation is limited to that which the court considers just in relation to any loss.

Significantly for present purposes, in applications under the Proceeds of Crime Act 1996, an undertaking as to damages is not required

because of this explicit, albeit limited, provision for compensation in circumstances in which the order lapses.

28 Even more significant in this regard, are the provisions of s. 65 of the Criminal Justice Act 1994 itself, which applies in the case of

orders made under the Act in domestic cases. This, it may be noted, is in virtually identical terms to the provisions in the United

Kingdom of s. 89 of the Criminal Justice Act 1988, and s. 19 of the Drug Trafficking Act 1994. Section 65 of the Criminal Justice Act

1994 provides as follows:-

“(1) If proceedings are instituted against a person for a drug trafficking offence or offences or for an offence or

offences in respect of which a confiscation order might be made under section 9 of this Act and either:

(a) the proceedings do not result in his conviction for any such offence, or

(b) where he is convicted of one or more such offences—

(i) the conviction or convictions concerned are quashed, or

(ii) he is pardoned by the President in respect of the conviction or convictions concerned,

the High Court may, on an application by a person who held property which was realisable property, order compensation

to be paid to the applicant if, having regard to all the circumstances, it considers it appropriate to make such an order.

(2) The court shall not order compensation to be paid in any case under this section unless the court is satisfied—

(a) that there has been some serious default on the part of a person concerned in the investigation or prosecution of

the offence concerned, and

(b) that the applicant has suffered loss in consequence of anything done in relation to the property by or in pursuance of

an order under this Act.

(3) The court shall not order compensation to be paid under this section in any case where it appears to the court that

the proceedings would have been instituted or continued even if the serious default had not occurred.

(4) The court may order compensation to be paid under this section to a person with an interest in property affected by

a confiscation order or a restraint order notwithstanding that he is not the person who was the subject of the relevant

investigation or prosecution.

(5) The compensation to be paid under this section shall be such amount as the court thinks just in all the

circumstances of the case.”

Again, this is significantly more limited than an undertaking to pay compensation for any and all loss suffered as a result of an order

which is subsequently set aside or lapses. There must be “serious default” by a person concerned in the investigation. Even then, no

compensation will be payable if the order would have been sought even if there had been no serious default. In other words, the

serious default must be the cause of the order being wrongly sought. Finally, and in any event, compensation is limited to such

amount as the court considers “just”.

29 These provisions apply to both the accused persons in respect of whom a confiscation order is made or may be made and to any

persons with an interest in property affected by a restraint order. It seems plain therefore, that where these provisions apply, the

Criminal Justice Act 1994 cannot be interpreted to require a broader undertaking as to damages, since that would be wholly

inconsistent with the limited compensation scheme provided for by the Act for cases in which a restraint order (or indeed a forfeiture

or confiscation order) ought not to have been made. While the word “may” in s. 24 grants a discretion, that discretion must be

exercised in accordance with the structure and objects of the Act as a whole. It cannot therefore be used to make a separate and

different provision for compensation than that provided for by the Act itself. In this regard, I note that this is the position under the

identical provisions in the United Kingdom legislation. Rule 4 of the Civil Procedural Rules of 1998 of England and Wales provide bluntly

that “a restraint order may be made the subject of conditions and exceptions … but the prosecutor shall not be required to given an

undertaking to abide by any order as to damages sustained by the defendant as a result of the restraint order”. The leading text book

by Mitchell, Taylor & Talbot, Confiscation and the Proceeds of Crime (Sweet and Maxwell, 2002) notes at para.3.023 that although

statutory restraint orders are similar to freezing orders and Mareva type injunctions at common law, there are a number of significant

distinctions, not least that an undertaking as to damages is not required for a statutory restraint order (and the authors also note

that even in the case of a freezing order where Hoffman La Roche applies, the public authorities will not be required to give any such

undertaking). This reasoning was applied in RE R [1990] 2 W.L.R. 1232, where it was held that no undertaking as to damages in favour

of third parties could be implied on the making of the restraint order.

30 It should be pointed out that these compensation provisions are unusual not by their limitation but rather by their extent. Persons

affected by a criminal investigation whether by way of arrest, detention search or seizure, and whether or not they are the subject of

the investigation, do not normally have compensation available to them on any terms, unless the conduct of the investigation is such

as to amount to the tort of misfeasance of public office, or, and unusually, constitutes some other specific tort. The failure of the

investigation, the acquittal of the accused, or the invalidity of the warrant, and even if attended by negligence, will not normally give

rise to any cause of action or claim for compensation.

31 It is quite clear therefore, and appears to be at least implicitly conceded by counsel for the respondent, that in cases of domestic

restraint orders in aid of domestic prosecutions, the existence of the compensation provisions of s. 65 mean that an undertaking as to

damages is neither required nor appropriate.

The Position under the 1996 Regulations

32 It was implicit in the argument in this Court that there was no equivalent compensation provision applicable in the case of an

application for a restraint order. I am not at all convinced that this is correct. The 1996 Regulations adapted the 1994 Act for the

purposes of an application for a restraint order in aid of proceedings in a designated state. It is not apparent therefore why the

provisions of s. 65 should not be applicable. Furthermore, and in any event, it is clear that in this case the original restraint and

confiscation orders in England were made under statutory provisions which contained compensation provisions. Those compensation

orders, on their face, appeared capable of providing compensation for all loss suffered by an acquitted defendant due to serious

default on the part of prosecution authorities, and it would appear plausible and indeed logical, that such compensation should extend

to loss caused by restraint orders made in other states pursuant to the original order. However, the matter was not addressed in

argument in any detail, and I will assume therefore, without deciding, that there were no applicable compensation provisions here.

However, it seems clear to me that on an application for a restraint order the court should certainly be informed as to the position in

relation to statutory compensation both in Ireland and in the designated state. To the extent that it might appear that compensation

for loss is available under the compensation scheme, then the court would be entitled not to require an undertaking. To the extent

that it appears there are no applicable compensation provisions, then a court would be entitled to seek an undertaking in terms similar

to those imposed by s. 65 or any comparable provision, namely that compensation such as the court would consider just, would be

payable in the case of loss caused by serious default on the part of the Irish authorities where such an order would not have been

made without such default.

The Broad Argument

33 The above considerations ought to determine this appeal. However, the argument in this Court did not address the provisions of s.

65 or their significance for the case. Instead the respondent argued that the Hoffman La Roche and Kirklees line of authority could

not or should not be applied in Ireland because it was alleged to infringe the principle of equality. While I note that this argument did

not find favour either in the High Court or with the majority of this court, it is nevertheless necessary to consider it, as it may be

useful in identifying the principles which in my view are applicable to the issue which was determined in the respondent’s favour in this

case, namely that notwithstanding the Hoffman La Roche and Kirklees line of authority, an undertaking was required in this case.

34 The equality argument advanced is put in simple, even crude, terms. The State, it is said, should not be treated differently from

other litigants. But that is a proposition which cannot withstand any prolonged scrutiny. The principle of equality guaranteed by the

Irish Constitution is that like persons should be treated alike, but also that unalike persons should not be treated alike. As Walsh J.

noted in the de Burca v. Attorney General [1976] I.R. 38 at p. 68:-

“…Article 40 does not require identical treatment of all persons without recognition of differences in relevant

circumstances but it forbids invidious or arbitrary discrimination. It imports the Aristotelian concept that justice

demands that we treat equals equally and the unequals unequally.”

In this case, as in many others, the critical question is whether the State is for present purposes the same as an individual litigant so

that equality demands that it is treated in the same way.

35 It can scarcely be argued that the State is not manifestly different from individual citizens in many significant respects. The

structure of the Constitution makes (indeed is founded upon) the most clear distinction between the State and the individual. It is

hardly surprising, therefore, that different provisions should apply to the State than to others. Nor can it be said that the State in

this case is in the same position as an individual litigant seeking a restraining order. It is self-evident that no individual litigant could

enter into the international agreements to which effect is given in the legislation. Nor could any individual citizen have the power to

pass the legislation in question. The legislation enacted does not give to any other person other than the central authority designated

by law, the right, and arguably the duty, to seek restraint orders from the court in aid of the proceedings in another sovereign state.

36 It is true that there are similarities between the order sought here and a Mareva injunction in private litigation (albeit as Mitchell et

al, even at the theoretical level there are important points of distinction between statutory restraint orders and freezing injunctions in

private litigation). It might be said that the purpose of legislation such as this is to make available to the law enforcement agencies a

weapon that has been found useful in private litigation; but the distinction between the two situations is also relevant. In the event

that a private litigant seeks and obtains an injunction and succeeds at the trial of the action, he or she will obtain the full benefit of

being able to execute against the money or property which has been preserved. That is a significant private benefit. The State is,

however, in an entirely different position. It seeks an order such as this as a matter of public duty and in the public interest, and

indeed in performance of an obligation undertaken pursuant to an international agreement. It obtains no private benefit from the

making of the order. That is graphically illustrated in this case by the fact that the end purpose of restraining the disposal of assets is

to permit an effective confiscation order to be made by another State. Furthermore, the State authorities cannot decide in their own

interests whether or not to bring an application: that is a public duty imposed by law and arguably enforceable by mandamus. There

are therefore significant distinctions between the position of the State in litigation such as this, and a private citizen seeking a

Mareva injunction whom the respondent seeks to erect as a comparator. The real question in this case, which the submissions did not

begin to address, was whether those differences justified a distinction whereby the State was not obliged as a matter of course to

provide an undertaking as to damages to obtain the statutory order.

37 It might be said (and indeed was said by O’Sullivan J. in the judgment under appeal) that while due account had to be given to the

important obligations upon the State, there was no reason why a party who had, ex hypothesi, been caused to suffer loss by reason

of the wrongful grant of a restraint order, should not be entitled to obtain damages from the State in the same way in which a

defendant wrongly restrained by a Mareva injunction is entitled to seek an inquiry as to damages. In this sense, it might be said that

whatever the differences between the position of the State and a private party seeking a freezing order, the person restrained is in

precisely the same position and should have the same remedies. This puts the argument in perhaps its most powerful form, but even

then it cannot be acceded to without acknowledging, and perhaps explaining, a number of cases in which it appears that the law

makes just this distinction, and tolerates the outcome.

38 In Dillane v. Attorney General and Ireland [1980] I.L.R.M. 167 the plaintiff challenged the position of Rule 67 of the District Court

Rules 1997 which prevented a District judge from awarding costs against a member of the Garda Síochána in the discharge of his or

her duties as a police officer. This position was contrasted with that of a common informer who might bring a prosecution in the

District Court, and could be exposed to an award of costs. The Supreme Court rejected the challenge. Henchy J. concluded that a

garda officer was exercising a different social function to that of a common informer, and accordingly the legislature was at least

entitled to distinguish between them whether or not the court supported or approved of the distinction. He said:-

“For a variety of reasons – among them the desirability that members of the Garda Síochána should be encouraged to

discharge their police duties assiduously by being given immunity from liability for costs or witnesses’ expenses in the

District Court – this discrimination could reasonably be thought a justifiable concomitant of the social function of the

members of the Garda Síochána when carrying out their duties as police officers.”

Significantly for the argument made by the respondent in the present case, the court also dismissed the challenge to the provision

based on the protection of private property on the grounds that if this was a distinction permitted by Article 41 it could not be an

unjust attack on property contrary to Article 40.3.

39 Dillane, which was not referred to in the parties’ written submissions but was discussed in argument, is a formidable obstacle to

the respondent’s contention in this case. A defendant, against whom a claim is dismissed, is put to an expense which ex hypothesi he

ought not to have incurred. An order for costs is a compensation for that loss. The law, however, while providing for the possibility of

this compensation against all other litigants, permits a distinction to be made in the case of the State as a litigant.

40 The examples can be multiplied. A related and powerful example was that proffered by Lord Reid in Hoffman La Roche. An accused

who has been refused bail pending trial is deprived of his or her liberty. In the event of his or her subsequent acquittal, there is no

provision for the payment of compensation or damages to such an individual. Similarly, there is no automatic right for the payment of

damages on the quashing of a conviction on appeal even when, as will often be the case, the successful appellant has been in prison

pending appeal. A warrant authorising the gardaí to enter a premises, or to search and seize property, permits something which would

otherwise be a trespass to property or goods or both. However, it is the normal rule that invalidity of such a warrant will not expose

the gardaí to damages for trespass for which any other entrant would be liable. Section 50 of the Constabulary (Ireland) Act 1836 is

one longstanding example of such a statutory protection. Similarly, it is the function, and indeed it is said to be the duty, of the

gardaí to seek out and detain anything that may be evidence in a criminal matter. Such retention of property of perhaps wholly

innocent private citizens may well cause inconvenience and even loss to them, but there are no provisions for compensation, and no

requirement that the gardaí offer an undertaking as to damages. To this list of examples could be added the provisions of the

Offences Against the State (Amendment) Act 1985 which permit for the freezing of funds by ministerial order alone, and make

provision for only a limited compensation provision akin to that provided for by s. 65 of the Criminal Justice Act 1994.

41 All these examples are inconsistent with the assumed principle of equality, and go to show that the law distinguishes clearly

between the position of State authorities carrying out public duties and other litigants, and does so in particular by protecting the

State from exposure to claims for damages which private litigants pursing private interests may face. The rationale appears to be

that, if law enforcement bodies must also take into account the risk of damages claims of unquantifiable amounts, then they may be

deterred from performing the duty which they owe to the public of pursuing and if possible prosecuting wrongdoers. The Hoffman La

Roche and Kirklees authorities cannot therefore be said to be anomalies. On the contrary, they are consistent with other features of

the law.

42 These considerations lead to a different line of authority. In one of the most important decisions in recent years in the law of

torts, this Court held in Glencar Exploration Plc v. Mayo County Council (No.2) [2002] 1 I.R. 84 that an invalid administrative action

which causes foreseeable loss to individuals will not, without more, give rise to any cause of action in damages. The general principle

was outlined in the judgment of Fennelly J. at p. 159:-

“Individuals enjoy protection from the consequences of unlawful public action in three respects: firstly, if that action

consists of the commission of a recognised tort, including, in certain cases, negligence; secondly, unlawful decisions can

be quashed on judicial review; thirdly, misfeasance in public office by knowing or malicious abuse of power, combined

with the right of appropriate cases to award exemplary or punitive damages is the most appropriate remedy.”

In rejecting a claim that public authorities had a general duty to take legal advice in a breach which would give rise to action for

damages, Fennelly J. observed at p. 159 that “[a]n obligation to seek legal advice even as a counsel of perfection could have a

paralysing effect on public administration.”

43 Another significant case in this regard is Kennedy v. Law Society (No. 4) [2005] 3 I.R. 228 where the High Court held that the Law

Society did not owe a duty of care to the solicitor a subject of an inquiry pursuant to a decision determined by this Court to be ultra

vires. The High Court held at p. 229 that the Law Society:-

“owed a duty of care to the public [and that] this duty of care was required to maintain public confidence in the

regulation and administration of the solicitors’ profession. In such circumstances, the [Law Society] did not owe a duty

of care to an individual solicitor [the subject of an inquiry]. To hold otherwise would amount to upholding two

incompatible duties and undermine the capacity of the first respondent to exert proper supervisory and regulatory

control of the solicitors’ profession”.

This conclusion was itself consistent with wide ranging authority in the common law world. The High Court cited with approval the

remarks of Brennan J. in the landmark Australian decision of Northern Territory v Mengel (1995) 185 C.L.R. 307 at p. 358:-

“If liability were imposed on public officers who, though honestly assuming the availability of powers to perform their

functions, were found to fall short of curial standards of reasonable care in ascertaining the existence of those powers,

there will be a chilling effect on the performance of their functions … The avoidance of damage to persons who might be

affected by the exercise of the authority or powers of the office rather than the advancing interest would be the focus

of concern.”

44 This court upheld the decision of the High Court on appeal, while pointing out that there might be circumstances where a private

duty might be owed in respect of some particular aspect of the carrying out of the public duty. The underlying reasoning appears to

be that the duty placed on a public body is to act in the public interest and that duty will be inhibited if the body decides to refrain

from action for fear of damages claims.

45 Indeed, in this regard it might be said that the whole existence and development of the tort of misfeasance in public office is

illustrative of the very distinction which is sought to be denied by the respondent in this case. On the one hand, the tort significantly

limits the circumstances in which a claim for damages will arise out of an illegal act. The similarity between these limitations and those

imposed by the compensation provisions of s. 65 of the Criminal Justice Act 1994 is striking. On the other hand misfeasance is a tort

which only a public authority can commit. It is not necessary or indeed desirable to consider the precise limits of this line of authority

here: it is sufficient to observe that there is substantial authority for a distinction in law between the position of a public body

exercising public powers and a private individual. Furthermore, that distinction is rooted in a policy consideration which seeks to avoid

the “chilling” or “paralysing” effect of a broad exposure to potential claims for damages on the performance of the public duty

imposed. This, it will be noted, is exactly the justification proffered by Lord Cross in Hoffman La Roche when he said that public

bodies “might be deterred from applying for an interim injunction by the necessity to give an undertaking as to damages”.

46 The facts of Glencar provide a useful example to test the respondent’s proposition in this case. That case established that the

invalidity of the mining ban, without more, gave no right to the mining companies affected to sue for damages. If, however, the

companies had not abided by the mining ban but had proceeded to act in breach of it (possibly on the grounds that they had been

advised that it was invalid) the County Council might have sought an injunction. If the County Council had been required to give an

undertaking as to damages and Glencar then succeeded at the trial, could Glencar then have recovered the damages which they

were not entitled to recover in their action? It would be a peculiar result if the party who complied with an arguably invalid order but

challenged it in the Courts, was to be in a worse position than one who defied an order which until quashed, was and remained the

law of the land. It is not necessary here to offer any concluded view on this matter. However, what these examples do show is that

in a number of different circumstances the law distinguishes between the State and public authorities carrying out public duties, and

the position of other litigants and does so on occasions by limiting claims for damages or compensation, and justified this distinction

by reference to the risk of inhibiting public authorities from performing their duties in the public interest.

47 All of these examples suggest that the simple rhetoric of the respondent’s arguments falls short in a number of cases. In such

circumstances, it is normally incumbent on a party asserting a broad principle of general application to either explain why these

apparent exceptions to the principle remain valid, or to concede that they too must fall if he is to succeed. In this case the

respondent did neither.

48 One factor which appeared to underpin the restriction on actions for damages against public authorities when carrying out public

duties seems to also be present in the reasoning of Hoffman La Roche and Kirklees. These cases illustrate a phenomenon of modern

society where private bodies may have resources which dwarf those of public authorities and in some circumstances even the State

itself. In the Kirklees case, the local authority frankly admitted it would not have the resources to meet a claim from the large

multiples which were seeking to trade on Sundays. This is not to say that bodies with substantial resources are not entitled to the

same consideration and protection as any other litigant. But these cases and Glencar, cast into sharp relief the difficult position of a

public body with limited resources seeking to enforce regulation made in the public interest, and the inefficiency and indeed paralysis

which may be created by the prospect of unlimited claims for damages.

49 The problem is not addressed by simply observing that damages will only be awarded when the party is in the wrong and

authorities can avoid damages by taking care to be correct. The critical time for evaluation is at the time when the decision has to be

made and when what is faced is not a reality, but rather a risk of perhaps unlimited damages and when there is no way of knowing for

certain what a court may do at some time in the future. As Professor Frederrick Schauer observed in his article “Is it Important to be

Important? Evaluating the Supreme Court’s Case-Selection Process” (2009) 119 Yale L.J. Online 77 at p. 84:-

“Whenever the Supreme Court – or any court – sets forth a rule, standard, principle, test, or whatever, it creates the

possibility of three different forms of behaviour on the part of those governed by the rule. One is compliance, another is

violation, and the third is…”dropping out”; ceasing to engage in the behaviour that the rule seeks to regulate.”

When courts announce a rule, their subsequent experience of it is normally limited to the second category of case, and they have

little information about, or way of gauging the extent of the third category. Yet the prediction of the impact of any rule, not just

upon those who come to court in future, but also and perhaps more importantly on those who comply reluctantly, or disengage from

the process, is an important part of the assessment when a rule of general application is announced. One legitimate question

concerns the likely impact of an obligation to provide an unlimited undertaking in cases of restraint orders in aid of foreign

prosecutions.

50 It is somewhat unusual that a restraint order is sought, as in this case, when a trial in a designated state has concluded, a

defendant has been convicted and a confiscation order made. In the normal course, it is to be anticipated that cooperation restraint

orders will be sought at the outset of a criminal prosecution when the domestic restraint order is sought. Again, in most cases where

cooperation restraint orders are sought, the property involved is normally highly fluid and readily transferable and can run to many

millions of euro. Since the argument asserted on behalf of the respondent is alleged to be derived from a generally applicable principle,

it is useful to consider the contention that there should always be an undertaking against the damages both against that general

background, and the specific circumstances of this case.

51 There was some uncertainty as to the circumstances in which it was contended that an undertaking as to damages, if granted,

could be called upon. However counsel did not seem to dispute the analogy with an injunction in civil proceedings. In such cases, an

undertaking as to damages provided on the grant of an ex parte injunction may be activated in at least three situations: where the

actions fails at the trial; where the ex parte order is not continued at the interlocutory stage; and where the injunction is discharged

on grounds such as lack of disclosure. The first of these examples is perhaps the most important, and illustrates why in my view the

analogy with civil proceedings is imperfect. A defendant may be acquitted in a court of trial either because of some unforeseen

technical error or because a jury is not satisfied beyond reasonable doubt of his or her guilt, but it would not necessarily follow as a

matter of logic that the restraint order should not have been sought, or granted. It does not seem just that an acquitted defendant

could then seek to recover damages on an undertaking which had been required as a condition of the grant of the restraint order. The

analogy with prosecution proceedings drawn by Lord Reid in Hoffman La Roche is instructive. An acquitted defendant does not

normally receive compensation (or costs) even if denied bail pending trial. If it were otherwise, the State authorities could be exposed

to potentially limitless claims and significantly inhibited in performing their duty.

52 The prospect of an undertaking becoming operative because of a mere technical error gives rise to other troubling considerations.

An application for a s. 24 restraining order may involve obtaining proofs from an unfamiliar foreign jurisdiction, and then navigating at

speed the rather complex legislative code which provides for the making of international cooperation orders. Even for those cases

which are quite clear on the merits, the prospects of failing on some technical error, or indeed some unforeseen legal point, are by no

means negligible. As Fennelly J. observes, mistakes can happen. If for example it appeared likely that a court may set aside the order

on some such technical but curable grounds, the Minister may be well advised to bring a further application immediately to ensure

that the property is still restrained and subject to confiscation in due course. In such circumstances, if the first application fails but

the backup succeeds, the requesting state will still achieve its object, and be able to confiscate the property or money. But is it

seriously to be suggested that the Irish authority seeking the confiscation cooperation order could be liable on the undertaking as to

damages, given on the first application (when it would not be liable on a purely domestic application in the same circumstances) on

the theory that the respondent was restrained by an invalid order from doing what they were otherwise entitled to do, at least as a

matter of domestic law, i.e. to transfer the money concerned out of the country to some other financial haven? Would a requesting

state which had been persuaded to grant an indemnity to the Minister who had been obliged to provide such an undertaking be then

required to provide the funds which would allow the respondent to be reimbursed, even though by definition such a person would have

been convicted of a serious criminal offence and been subject of a confiscation order in that jurisdiction?

53 If these are even foreseeable risks in the process, then the uncertainty that is thus created is likely to have a chilling effect on

the performance of the public duty involved. It is hard to know which is the more unappealing prospect: considering from the Irish

perspective the risks that a prosecution in being under an unfamiliar criminal code and over which the Irish Minister has no control

may fail, or the calculation that foreign prosecution authorities might have to make as to the likelihood of the procedural steps in an

Irish court miscarrying in some way and giving rise to a liability on the undertaking. In either case the capacity for debate,

disagreement, confusion, hesitation, and failure to act, is obvious. Yet it is of the essence of orders seeking to restrain disposal of

funds, especially those suspected of being the proceeds of crime, that they should be capable of being acted upon as speedily and

decisively as possible. If this does not occur, the loser in such a scenario would be the public interest in deterring crime and in

preventing Ireland becoming an attractive location for the proceeds of crime, or the assets of criminals. There is no circumstance in

which that harm can be remedied by any order the court might make if it turns out that the order ought to have been obtained, but

was not. This in my judgment, is why the compensation provisions of s. 65 are limited in the way they are. That section balances the

necessity to have compensation available in limited circumstances with the need to avoid inhibiting the necessary action. Where

therefore there are applicable statutory compensation provisions it is also a reason why no undertaking whatsoever should be

necessary. If there are no statutory compensation provisions applicable, then it is the reason why any undertaking should extend no

further than the scope of compensation provisions applicable to cases of domestic restraint.

54 It might be suggested that there are other examples of loss which ought to be compensated for, and which will not be captured by

the compensation provisions or an undertaking patterned upon them. Such a possibility cannot be excluded, although it is significant

that no real life example could be pointed to, and no detailed hypothetical case advanced. While however, it is easy to construct

hypothetical claims running to many millions, it is more difficult to point to concrete examples of serious loss being caused by the

wrongful grant of ex parte restraint orders in a case like this. The argument discussed already, that a defendant if not restrained by a

technically invalid order would have been able to spirit funds out of Ireland to some financial haven and thus frustrate the foreign

prosecution, is not one which is attractive. The possibility of some unforeseen circumstance cannot be ruled out. However, that is

just the type of situation where it ought to be possible to identify the problem very quickly and to move to set aside the order, or at

least persuade the court to take some measures to mitigate the risk of any significant loss.

55 This is the point at which the flexibility of the discretion recorded to the court becomes relevant. Due to the fact that the original

application is made ex parte, the court is entitled to expect and obtain the utmost good faith in disclosure in the central authority

which includes the identification of any potential difficulty created by the making of the order. In appropriate cases that may involve

informing the court of the compensation provisions in the requesting state. The fact that the application may be made in camera

means that the risk of erroneous reputational damage is lessened. If the court is still in doubt, or if the case is borderline, then the

court retains the power to refuse the order if it considers that there is a real risk of injustice and no undertaking is offered.

Alternatively, the court could require a form of undertaking patterned on the compensation provisions provided by s. 65 and limited to

the default of the central authority. In any case, it is open to the court to make an interim order for a strictly limited period of time

and direct that notice should be given to the respondent of any application to extend it.

56 Accordingly, I would conclude on this aspect of the case that the Hoffman La Roche line of authority is in principle consistent with

Irish law, although in each case in which it is sought to be applied the justification must be carefully scrutinised. I would also

conclude that the line of authority is capable of applying in the case of an application for a restraint order under s. 24 of the Criminal

Justice Act 1994 as adapted by the 1996 Regulations, so that there should be no automatic requirement to the general undertakings

to damages in such cases. In my judgment, the presumption should be against such an undertaking being required.

The High Court Judgment

57 It will be apparent, however, that the High Court started from the opposite presumption, namely that an undertaking is required.

The court recognised that it should lend particular weight to the obligations of the State under an international convention and should

be particularly conscious of the pressing and increasing need for prompt, comprehensive and effective international cooperation in

respect of criminal activities. The court recognised that very great attention should be paid to those considerations. In the result,

however, the High Court still required an undertaking as to damages albeit limited to the actions of the Minister’s authority and not

extending to those of the requesting authority. That judgment has been upheld by the majority of this Court. I recognise and respect

the sentiments which led the learned High Court judge to this conclusion and differ from him only with reluctance. However, I consider

that the judgment does not set out a sound and principled basis for requiring such undertakings in this type of case.

58 First, the judgment seeks to draw a distinction between the Hoffman La Roche and Kirklees cases, and the present on the basis

that both of the English cases involved a facial breach of the law which the relevant authority was seeking to enforce. That of course

is a factual distinction, but it is not one which in my view should result in any difference of outcome. Neither case was decided upon

that basis. In neither case could it be said that there was no issue to be tried, in which case different considerations would attend

the grant of an injunction. On the contrary, in both cases, it was contended on behalf of the respondents that the relevant provision,

whether the maximum prices order or the provisions of the Shops Act, was void and therefore of no effect. If the respondents had

succeeded in that claim at the trial, then if they had been restrained by injunction pending trial, they would have suffered a loss

which they ought not to have. Yet if there was no undertaking, they would not recover. This is precisely the circumstance

contemplated by the House of Lords in both those cases, and, it appears, approved by the High Court. Accordingly, I cannot see how

the distinction asserted is sufficient to lead to a different result in this case. It does not matter on what basis the respondent

contends that they are not in breach of the law: what matters is that the Minister is obliged to enforce the general law in the public

interest. If in the Kirklees case the business had also claimed (or perhaps only claimed) that what they were doing did not amount to

a breach of the Sunday trading restrictions, either because of some asserted interpretation of the words of the Shops Act, or some

scheme put in place within the shops on those days, this would not, as I read it, have made any difference to the outcome of the

case. The underlying rationale of the judgment remained: that the local authorities should not be subject to the risk of crippling

damages for having bona fide sought to enforce the law. Indeed, it is apparent that the Hoffman La Roche and Kirklees line of

authority is regularly applied in the United Kingdom outside the context of a facial breach of the law contended to be invalid (e.g. SIB

v Lloyd Wright [1993] 4 All E.R. 210, where the financial services authority sought an injunction pursuant to the Financial Services

and Markets Act 2000; and SEC v Manterfield [2010] 1 W.L.R. 172 where an injunction was granted to the United States authorities

in respect of an alleged fraud in each case without requiring an undertaking as to damages).

59 Second, on the logic of the High Court judgment, the restriction of the undertaking to loss attributable to the actions of the

Minister alone makes little sense. The theory of an undertaking as to damages in private law is to provide for loss resulting from the

existence of an order. It is not dependent on culpability, or indeed any activity other than that of seeking the order. If, for example,

the English conviction or confiscation order had been belatedly overturned, then the Irish restraint order made pursuant to s.24 as

adapted would necessarily fall. The respondent would have suffered the same loss by reason of the existence of the restraint order,

whatever the source of its frailty. If the High Court is correct that there is a principle that a party should recover any loss flowing

from the making of the order, then I can see no justification for exempting the Minister who sought the order alleged to cause the

loss from the obligation to make good that loss. If, however, it is permissible to deny recovery of some of the loss flowing from the

order then I do not see why it is necessary to go beyond the provisions of s. 65 of the 1994 Act if applicable, or some similarly

patterned undertaking if not.

60 More fundamentally, the recognition in the High Court judgment of the importance of prompt and effective international

cooperation in respect of criminal matters is itself recognition that this type of case cannot be treated as akin to one in which a

private party applies for a freezing order. However, the High Court did not explain what weight should be given to this value in

considering whether or not an undertaking should be required, nor did it identify circumstances in which it might tilt the balance

against requiring such an undertaking. On close analysis, it is clear that the consideration of the public interest in prompt and

effective action against crime will be largely illusory if no account is taken of the chilling effect of requiring such an undertaking on

the prospect of prompt comprehensive and effective international cooperation. The State’s interest in pursuit of the particular crime is

not necessarily inconsistent with requiring an undertaking as to damages. Indeed this is the very reasoning which led the High Court

to the outcome of requiring an undertaking as to damages in the present case, and it is entirely predictable that the same process will

lead to the same result and the same outcome in any other case.

61 The facts in this case are particularly revealing. It is difficult to conceive of a stronger case for not requiring an undertaking, if any

significant weight is to be given to the State’s interest. By the time this application was decided in the High Court, not only had the

respondent been subject to a trial and conviction which was itself final and conclusive, but she had also been the subject of a

confiscation order made in the English proceedings, which itself was also both final and conclusive. Furthermore, although the order of

Quirke J. had been in existence for 15 months, the only ground upon which the respondent sought to contend it should be said set

aside was the legal argument, correctly rejected by the High Court, that the absence of an undertaking meant that the injunction

was granted without jurisdiction. There was not the slightest suggestion that there was any error of fact or law on the part of either

the Irish or English authorities, and no suggestion that any injustice would be created by the grant of the injunction. Furthermore, all

this occurred in the context of an application to set aside the order, and accordingly an occasion which the respondent party had full

opportunity to be heard. Nevertheless, the Court proceeded to require the limited undertaking to be given as a condition of continuing

the ex parte order or as it was described, a condition of the interlocutory order in due course. This practical example illustrates

something which is perhaps detectable by analysis from first principles: the approach taken by the High Court will inevitably lead to

the requirement of an undertaking in almost every case. There is something wrong with a balancing process that always comes to the

same outcome. For the reasons set out above, I consider that this test is inconsistent with the sensible approach reflected in the

decision in Hoffman La Roche as much as in s. 65 of the Criminal Justice Act 1994. I would allow the appeal to the extent indicated by

this judgment. If it is accepted on behalf of the Minister that s. 65 or compensate on provisions of the English Act, or both, apply to

this case, I would not require any undertaking; if the position is unclear, I would only require an undertaking in accordance with the

terms of s. 65 of the Act as a condition of the ex parte order. Given the facts that on the inter partes hearing nothing was pointed

to which could conceivably have either amounted to a substantive ground for setting aside the order or a possible injustice against

which the court should protect the Respondent, and that by that stage the Respondent was the subject of a final conviction and

confiscation order, I would not have required an undertaking as a condition of the continuation of the ex parte order. Since in those

circumstances any loss would not seem to be covered by s.65 that qualification may be academic.