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High Court of Ireland Decisions |
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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Manorcastle Ltd -v- Commission for Aviation Regulation [2008] IEHC 386 (28 November 2008) URL: http://www.bailii.org/ie/cases/IEHC/2008/H386.html Cite as: [2008] IEHC 386, [2009] 3 IR 495 |
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Judgment Title: Manorcastle Ltd -v- Commission for Aviation Regulation Composition of Court: Judgment by: Charleton J. Status of Judgment: Approved |
[2008] IEHC 386 THE HIGH COURT Record No. 2008 1049 SP BETWEEN:MANORCASTLE LIMITED APPLICANT -AND- COMMISSION FOR AVIATION REGULATION RESPONDENT Judgment of Mr. Justice Charleton, delivered ex tempore on the 28th day of November, 2008 This is an appeal pursuant to statute against the decision of the respondent to refuse to renew the applicant’s licence to act as a tour operator, which decision was made on the 24th of October 2008 and in effect caused the termination of the existing licence on the 31st of October 2008, which was the last day of its operation. However, under the Transport (Tour Operators and Travel Agents) Act 1982 (‘the 1982 Act’), once an appeal against such a decision is taken the applicant is entitled to continue trading pending the determination of that appeal. The history of the matter requires me to consider a number of facts. The appropriate method of examining those facts shall be determined after I recite them, as one of the crucial questions in this case is: what is the nature of the review that I am conducting? Is it a judicial review, a complete rehearing, or some combination of the tests laid down by the courts in the various cases involving such licensing decisions? Factual Background For a number of years, the applicant has carried on business both as a tour operator and as a travel agent. As I understand it, in 2008 it decided not to continue acting as a travel agent but wished to continue acting in the ordinary way as a tour operator. The first relevant date for present purposes is the 31st of July 2008, when the applicant was contacted by the respondent and questioned in relation to certain accounts, specifically its annual accounts up to the 31st of December 2007. Apparently, there had been an error in submitting these accounts and they arrived late as a result. That would not have been a serious issue, as far as the respondent was concerned, but for what emerged on the examination of those accounts. I understand that the auditors employed on behalf of the applicant were L'Estrange & Company. They advised the respondent on the 25th of July 2008 that the applicant's licensable turnover during the period from the 1st of November 2007 to the 30th of April 2008 amounted to €1,293,699. The accounts which arrived with the respondent, which has a statutory entitlement to them, indicated a number of matters which the respondent regarded later as being disquieting. In the notes to the accounts which arrived in August or September, there is heading indicating a fundamental uncertainty in relation to the calculations. This reads:
In the accounts, the note indicating a concern (note 17) made reference to a number of matters. These merit quotation. Under the heading "Going Concern" it says:
(2) The company will have to cut its wages and overhead expenditure significantly to avoid a repeat of such losses; (3) The company did not [renew] its travel agency licence in May 2008, and hence will have to rely entirely on business from tour operators; (4) The ability of the directors to continue to support the business financially is now much reduced as a result of the personal equity which they put into the company to fund last year's losses. In addition, the current banking difficulties/credit crunch makes it far more difficult generally to borrow money. The directors may have difficulty trying to borrow further funds to support the company; (5) The company will require continued credit facilities from its suppliers, some of whom are overdue; (6) The economic downturn now being experienced is likely to have a bearing on many travel agents/tour operators". An explanation was sought in relation to the loss and, having regard to the statutory scheme, it is obvious that the respondent has the right to seek such an explanation. It has a duty to ensure that persons conducting business as a tour operator have the necessary financial resources to do so. The first explanation provided by the applicant was based on the chartering of unnecessary aircraft for the trip to Lapland in December 2007, a mainstay of the company's operation and something which it pioneered to the great satisfaction, I am sure, of those who have been on this trip. The second explanation concerned difficulties experienced with a Bulgarian ground-handler in relation to a matter in which the applicant believed that it had been wronged and in respect of which it was considering issuing legal proceedings in Bulgaria. Despite those explanations in relation to the loss, the respondent had a number of other concerns in relation to the auditor’s report, the draft accounts and the "full accounts" which had been forwarded. The respondent was concerned that there had been no changes in the shares or shareholding to convert loans from the directors and that no management accounts had been prepared in relation to the current year, as of the date of the meeting of the 22nd of August 2008. The applicant regarded the preparation of such accounts as highly expensive but it was put in clear terms, it seems to me, by the respondent that it was necessary to have such accounts. The respondent was also concerned that the expenses bill had jumped considerably and that the current bank account had been depleted over a number of years by approximately €400,000, which is perhaps understandable in the context of the unfortunate losses of the company. However, the balance sheet was in negative territory and also the respondent was concerned that the directors had injected in excess of €500,000 over one year by way of loans. The respondent was of the view that this stimulus was potentially insufficient. There were also a number of other general points that exercised the respondent's attention and in respect of which they addressed their concerns to the applicant. I will deal with the issue of the appropriate test on this appeal in due course. I must also consider the limits of the Court's ability to critically review the evidence. Is the review by the court limited to evidence existing on the date of the decision, the 24th of October 2008, or is it possible for the Court to examine evidence arising after that date? It seems to me that one of the issues of greatest concern is whether or not there was sufficient allowance given by the respondent to a responsible company carrying on business for many years to make its case. I note that under the 1982 Act, the Minster, and now the respondent, cannot actually withdraw a licence or fail to renew it unless a reasonable opportunity is given for the company trading as a tour operator and having a licence in that regard to make submissions. I therefore continue by noting that on the 25th of August 2008, the respondent wrote to the applicant indicating some of its concerns in relation to accountancy matters and noting the desirability that the applicant should have an in-house accountant. Through the next number of weeks there was further communication, during which a suggestion was made that the directors' loans should be structured in a more concrete fashion so that they could not be withdrawn to the ruin of the company. It is unclear whether the applicant volunteered such a move or whether it was requested by the respondent. For present purposes, I am accepting that the applicant came up with this idea because that is the most beneficial interpretation. On the 19th of September 2008, a letter of subrogation was written by the applicant for the attention of the respondent. That indicated that of the directors' loans amounting to over €600,000, as of the 30th of June 2008, €350,000 would not be withdrawn from the company, in other words recalled by the directors, without the express consent of the respondent. This assurance provided a degree of comfort. On the 19th of September, the application for a licence under the 1982 Act was made by the applicant. As I have already noted, it seems that it was the letter from the respondent of the 31st of July 2008, inquiring about the accounts, which caused the applicant to realise that there had been a mistake in this regard. The refusal of this licence is the focus of this statutory appeal. Nothing turns on the application in itself or the wording thereof. Matters then proceeded because at this point the respondent was actively considering the renewal of the licence. On the 6th of October 2008, an e-mail was received by the applicant from John Mullaney in which the respondent indicated that it was still awaiting management accounts up to the 31st of August 2008 as well as a profit and loss account balance sheet in respect of the company in order to review the licensable turnover from the 1st of November 2007 and also to ascertain whether the current statutory bond, providing monies for travellers in the event of a collapse, needed to be increased. Each tour operator is required to have a bond of ten percent of projected or likely turnover available in the event of a crash in its business whereby persons may be stranded abroad and that money is then available to deal with their concerns about getting home and other distress they may suffer. On the 10th of October 2008, the respondent sent what I would regard as a warning letter to the applicant. That warning letter went through a number of points. Firstly, an issue had arisen as to whether the applicant was due a VAT refund. There has been a great deal of argument in relation to this entitlement and also as to whether a VAT refund can be equated to money in the bank. I should say that I am taking the view that a VAT refund is in fact likely in relation to this company. Another concern was raised in relation to the fact that the respondent had suggested that the loans should be not simply the subject of a subrogation letter but should be converted into equity, but that this had not yet been done and had yet to be accepted by the applicant. As of the date of the warning letter, the loans merely remained the subject of a subrogation letter. In addition, an issue was raised in relation to the management accounts up to August 2008 and as to whether the information that had been supplied was sufficient for evaluation purposes. The respondent further queried the negotiation of rates for a number of charter flights to Lapland for a Santa Claus-type experience, expressing concern was that there was no evidence of an ability to pay for these charter flights, notwithstanding a cash flow forecast. The respondent noted that charter contracts for the Christmas period of the 5th to 23rd December had not been supplied, nor had payment schedules been provided. The respondent raised concerns in relation to the bank overdraft which then stood at €100,000 which was authorised and personally guaranteed by a director of the applicant. In relation to the accrual of directors’ loans and other debts of the applicant, the respondent indicated: "the Commission's concern that the company's financial condition is nothing less than grave". The respondent went on to state that it remained to be convinced that it should further process the application and issue a licence as of the 31st of October 2008. On the 22nd of October 2008, a memo internal to the respondent was written summarising the financial situation of the applicant. It noted: that the loss for the year ending the 31st of December 2007 was €630,105, shareholders funds then being negative at €503,000; that a reduction in turnover from 2007 to 2008 to €470,000 had occurred, whereas costs had increased by €374,000; that the cash outflow for the year was €177,000; and that liquidity was bad; and that the asset ratio of debt to liquid assets was 0.55:1. The respondent is apparently of the opinion that a company should have an asset ratio of 2:1, but the applicant had a bank overdraft of €155,000 as of the 31st of December 2007. Following this, the relevant accounts were reviewed. I also note in this context that a number of meetings took place between the parties. Among these meetings were those already noted and which are minuted, but also a number of meetings prior to the decision of the 24th of October 2008. It seems to me that the fact that meetings are held is important, not just from the point of view of the statutory and constitutional duty of an administrative body to provide reasons, but also owing to the fact that a singular responsibility has been placed on the respondent to exercise its expertise in assessing whether the material put before it as to solvency and ability to carry on trading is credible. In order to limit the danger to holiday makers of being stranded overseas, the respondent must determine whether an application is credible and whether it is made by persons who are regarded on a face-to-face meeting as being reliable. The Refusal On the 24th of October 2008, the refusal letter, which is the focus of this case, was issued. The decision to refuse a licence was based upon the applicant’s trading position which I have already described. The respondent was not satisfied by the applicant’s sales figures. By way of an aside in this regard, I note that at the commencement of negotiations there were sales of around 290 to 300 passengers for the planned Christmas Lapland trip. As of the 29th of October, a number of days after the letter, there were sales of 710 passengers. At the date on which the affidavit on behalf of the applicant was filed in this case, sales stood at around 900. As of the date of hearing, I understand that they are at 1,000 passengers or thereabouts. The break-even point is 1,200 passengers, and I understand the maximum number of seats available is 1,474. The first flights are scheduled to depart in six or seven days’ time. As a second matter of concern, the asset ratio was noted as being 0.28:1, having further descended from 0.55:1. In addition, there was concern about bookings for travel as of the 1st of November and the amount that the company had on deposit with a view to paying for the flights and accommodation of those travelling. There was further worry in relation to a debt to Etihad Airways of €40,000. The respondent was concerned that there was no evidence of the existence of contracts in relation to the trips to Lapland, although this did not appear to be the case in respect of the Dubai trips that were the other proposed mainstay of the applicant’s business. In addition, an overdraft of €100,000 had been authorised by the bank and guaranteed by the directors although this was not mentioned in the latest cash flow projection. The respondent also indicated that the business and organisational resources of the company were not adequate. The refusal letter stated:
As such, those were the respective positions of the parties. There are a number of preliminary points which I need to decide in this and I turn to them now. Preliminary Issues The first point that I have to decide is the time at which I should assess the respondent’s decision. There are a number of possibilities. I could adjudicate based on the prevailing circumstances at the time the decision was made, namely the 24th October. I could adjudicate as of the date of this hearing, the 28th of November. Alternatively, I could adopt a hybrid approach and assess the main dispute as of the 24th of October but were I to see fit to impose conditions by allowing the appeal and granting a licence, I could deal with those conditions on the basis of up-to-date information. The second preliminary issue which I must determine is the appropriate test for this appeal. Are these proceedings a re-hearing, a judicial review, or an assessment of whether the decision is probably incorrect on the merits? Is it the case that if the decision is incorrect on the merits, the court must impose additional conditions to ensure that the objectives of the 1982 Act are complied with? In this regard, I turn to those objectives. The intended effect of any piece of legislation is something that must be gleaned from the Act in full and not simply surmised by considering one section in isolation. Adopting this approach, it is clear that the purpose of the 1982 Act is to protect persons who are travelling as holiday-makers and to avoid the scandal which had arisen from time to time prior to its entry into force whereby a travel agent or a tour operator might collapse and persons might be stranded in all kinds of exotic places unable to get home and demanding money from their relatives and national embassies etc. The Relevant Law Section 4 of the 1982 Act provides:
Section 6 of the 1982 Act deals with the issue of licences. It provides:
(2) The Minister shall refuse a licence to carry on business as a tour operator or as a travel agent if he is not satisfied that such person complies with the requirements of this Act. (3) Without prejudice to the generality of subsection (2) of this section, the Minister shall refuse a licence under this Act to a person if he is not satisfied that:
(b) having regard to the past activities of such person or of any person employed by him or, if such person is a body corporate, having regard to the past activities of any director, secretary, shareholder, officer or servant of the body corporate, such person is a fit and proper person to carry on business as a tour operator or travel agent, as the case may be. (5) A licence granted under this Act shall remain in force for such period as the Minister thinks fit and specifies in the licence.” Section 13 of the 1982 Act creates a security arrangement known as ‘the Bond’. It provides as follows:
(2) The arrangement referred to in subsection (1) of this section is in this Act referred to as "the Bond". (3) The Bond shall provide that, in the event of the inability or failure of the tour operator or travel agent concerned to meet his financial or contractual obligations in relation to overseas travel contracts, a sum of money will become available to the Minister, or to any person nominated or approved of by the Minister, as trustee, to be applied for the benefit of any customer of the tour operator or travel agent concerned who has incurred loss or liability because of such inability or failure to meet financial or contractual obligations. (4) The sum of money referred to in subsection (3) of this section may be applied for all or any of the following purposes:
(b) to reimburse a customer of a tour operator or travel agent for any reasonable expenses necessarily incurred by such customer by reason of the inability or failure of the tour operator or travel agent to meet his financial or contractual obligations in relation to an overseas travel contract; (c) to refund, as far as possible, to a customer of a tour operator or travel agent any payments made by him to the tour operator or travel agent in respect of an overseas travel contract which could not be completed by reason of the inability or failure of the tour operator or travel agent to meet his financial or contractual obligations in relation to such overseas travel contract; (d) to defray any reasonable expenses incurred by the Minister, or provide for any payments by the Minister, on behalf of a customer of a tour operator or travel agent in respect of an overseas travel contract which could not be completed by reason of the inability or failure of the tour operator or travel agent to meet his financial or contractual obligations in relation to such overseas travel contract. (6) As soon as may be after the end of each year, accounts kept in pursuance of this section shall be submitted to the Comptroller and Auditor General for audit and, immediately after the audit, a copy of the income and expenditure account and of the balance sheet and a copy of the report of the Comptroller and Auditor General on the accounts shall be laid before each House of the Oireachtas. (7) Without prejudice to any existing right of a customer of a tour operator or travel agent to recover damages in relation to the standard of accommodation or service provided pursuant to an overseas travel contract, nothing in this section shall be construed as enabling such customer to recover any damages out of any sum of money made available under the Bond.” It should be noted that the responsibilities of the Minister for Transport under the 1982 Act have largely been delegated to the respondent. The respondent’s duty, therefore, is to ascertain, on a yearly, half-yearly or quarterly basis, the turnover of each particular tour operator or travel agent and to ensure that they have lodged at least ten per cent of their likely turnover for the year. Section 15 of the 1982 Act also establishes a Travellers’ Protection Fund under which money gathered from travellers by way of a tax on those going through airports is retained by the respondent in case a problem should arise of the type which I have already described. Given the concerns which underpin the 1982 Act, it is not surprising that Section 6 specifies a number of prerequisites which must be satisfied before the respondent can grant a licence. Section 6(3)(b), for example, makes reference to the past activities of the person seeking the licence. That, it seems to me, requires the respondent to consider whether the applicant has been involved in a prior disaster which has left people stranded or other such serious activity perhaps in an unrelated type of business. Section 7 of the 1982 Act confers on the respondent the power to impose certain conditions before a licence can be granted. When the respondent imposes conditions, it does so with the objects of the 1982 Act in mind. Section 8 of the 1982 Act gives the respondent discretion to revoke an existing licence in certain specific circumstances, where it is no longer satisfied that:
(b) having regard to the manner in which the holder of the licence is carrying on his business, he is a fit and proper person to carry on business as a tour operator or travel agent. The applicant argues that if the respondent had in fact harboured such serious concerns in relation to the applicant’s business, it would have revoked the licence in July, August or September of this year. I remain unconvinced by this argument. As I have already outlined, the purpose of the 1982 Act is to protect holiday-makers. No issue arose as to their welfare in the respondent’s dealings with the applicant until recently, when the proposed trips to Lapland and Dubai were considered. Section 9 of the 1982 Act creates an appeals procedure, and that is this case, which applies where the respondent proposes to revoke a licence. It provides as follows:
(2) Whenever the Minister refuses to grant a licence or decides, having considered any representations that may have been made by the holder of a licence, to revoke the licence or to vary any term or condition of the licence, he shall notify the applicant for, or as the case may be, the holder of, the licence of the refusal or decision and such applicant or such holder may within seven days appeal to the High Court against such refusal or such decision. (3) On the hearing of an appeal under this section in relation to a refusal to grant a licence under this Act or in relation to a decision of the Minister to revoke, or vary the terms and conditions of, a licence granted under this Act, the High Court may either confirm the refusal or decision or may allow the appeal and, where an appeal is allowed, the Minister shall grant the licence or shall not revoke, or vary the terms and conditions of the licence as the case may be. (4) A decision of the High Court on an appeal under this section shall be final save that, by leave of that Court, an appeal from the decision shall he to the Supreme Court on a specified question of law. (5) An appeal shall not lie in any case where the Minister refuses to grant a licence to an applicant who does not comply with the provisions of section 13 of this Act or in any case where the Minister revokes a licence pursuant to section 10 of this Act. (6) Where, after the commencement of Part III of this Act, a person appeals against a decision of the Minister to revoke or vary any term or condition of a licence or appeals against a refusal of the Minister to grant a licence, such person shall not, pending the determination of the appeal, carry on business as a tour operator or travel agent unless he complies with the provisions of section 13 of this Act. As such, the 1982 Act gives the licence-holder the right to make representations where revocation is proposed. This statutory entitlement is informed by the constitutional property right which the licence-holder possesses. The duty resting on the respondent is to notify the holder in a general way that it has concerns, but that duty cannot be simply cast on the respondent in isolation because it is clearly the obligation of those who are applying for this statutory privilege to satisfy the respondent that firstly, they are fit and proper to carry on the business and secondly, that their financial business and organisational resources are adequate to discharge their potential obligations. One of the questions posed in this appeal is whether or not the applicant was afforded the right to make representations and whether those were dealt with in some kind of an underhand way, by way of a pre-plan on behalf of the respondent. I am absolutely satisfied on the papers that there was no underhand dealing by the respondent. I am further satisfied that the applicant was given a full right to make whatever submissions were needed. One particularly noteworthy aspect of the appeals process is the fact that if the High Court considers that the appeal should be allowed, the respondent is automatically obliged to grant a licence. The ordinary position in judicial review is that when the High Court finds a decision to be erroneous, the matter is returned to the original decision-maker for re-consideration. This is clear from the decision of the Supreme Court in Glencar Exploration v. Mayo County Council [2001] IESC 64. This unique mechanism under the 1982 Act is therefore an extremely important condition in determining what the scope of the appeal is. I now turn to the two questions of the point in time at which the adjudication should take place and the standard of review. The Point of Adjudication In relation to the time of the adjudication, I have decided as follows. In Balkan Tours v. Minister for Communication [1988] ILRM 101, a decision was made to revoke the applicant’s licence in circumstances where it had distributed brochures containing an inaccurate reproduction of its licence. On the facts, Lynch J. held that the revocation of the licence would cause damage to the applicant which would be disproportionate to its fault. He was satisfied that the publication of the falsified tour operator's licence in the brochure was done without positive intention on the part of the applicant and instead arose through carelessness or negligence. However, in overturning the decision, Lynch J. imposed a number of conditions upon the applicant. Firstly, he ordered that that €1,000 be paid towards the costs the respondent, a substantial contribution in 1988. Secondly, he ordered that the applicant’s brochures had to be corrected and that all necessary efforts had to be made to retrieve the inaccurate brochures within Ireland. The High Court further held that the applicant was obliged to comply with the statutory requirements henceforth and that the Minister would not be inhibited from revoking the licence again, should there be any cause to do so. In the course of his judgment, Lynch J. reviewed the jurisdiction under section 9 of the 1982 Act and, in particular, the date at which the assessment of suitability for a licence should be made. Lynch J. held that the High Court, on appeal from the Minister's decision by virtue of section 9 of the 1982 Act, must ascertain all the relevant facts of the case whether they were before the Minister or not at the time he refused the licence and then give effect to them. He stated at page 107:
This finding is not necessarily determinative of the issue however, because it is important to turn to the actual wording of the Act noting, in particular, the function which the Court has. The Court must review a decision of an administrative tribunal which is essentially concerned with business and finance. That is not something that is within the normal expertise of the courts. On the other hand, in Glancré Teoranta v. Cafferky [2004] 3 IR 401, Finnegan P. noted that it is within the jurisdiction of the High Court to decide whether or not something is or is not an exempted development under the Planning Acts. He held, therefore, that where an appeal under that legislation comes before the High Court, the appeal is to be regarded as a de novo hearing. As a matter of law, therefore, the actual function being exercised by the Court is of the utmost importance in deciding the parameters of review. A number of decisions have been cited as to the matters which may be taken into account. I note, for example, the restrictive view taken by Kelly J. in Murray v. The Pensions Ombudsman [2007] IEHC 27. I further note that in Glancré, Finnegan P. took a somewhat different view. He stated the following at page 406:
Finnegan P. continued by noting:
Finnegan P. then considered a number of other cases, including Balkan Tours and Dunne v. Minister for Fisheries [1984] IR 230. Finnegan P. then stated at page 407:
The 1982 Act provides that if an appeal is allowed a licence is automatically restored. It seems to me to be obvious that there is a minimum requirement before a decision of the respondent can be overturned; the High Court must be satisfied that it is not allowing a financially unviable tour operator to carry on business to the risk of holiday makers. Further, as I have held, the Court has its own power to impose conditions in addition to those already imposed, or in substitution or on a consideration of the current situation. That, it seems to me, puts the High Court in a position where it has to assume at least some responsibility for doing all that is necessary to protect the public. It could be argued that this renders post-revocation evidence relevant, but nothing I have heard in this case alters my opinion as to the correct procedure under the 1982 Act. The prescribed system involves the constant monitoring of accounts; the making of a warning where a serious situation has arisen, to the effect that the company may not have its licence renewed; and the right of the company to make representations. It seems to me that post-revocation developments will only be relevant in assessing what, if any, conditions may need to be imposed in order to correct a decision which is wrong in the first place. I have determined that the correct date on which to analyse the present case is the date of the decision itself, the 24th of October. I also note that the respondent is not a court, and it is therefore not functus officio once it has made its decision. Rather, as an administrative body it can reconsider a decision in appropriate cases where the licence has just expired or when it is just about to expire. It may be right for the respondent to refuse to engage in such reconsideration if no new information of substance is submitted. Where such a refusal occurs, there is no appeal against that decision under the statutory scheme. Instead, the decision to refuse to again consider a licence application may be procedurally correct or it may be deficient by reason of flying in the face of fundamental reason and common sense or by virtue of an error of fact of a fundamental kind which vitiates jurisdiction. In such cases, the only available remedy is judicial review. I am also influenced by the fact that on refusal of a licence under the 1982 Act, in the event of a company making real efforts to recapitalise or otherwise markedly improve its position, it can in exceptional circumstances immediately apply for a new licence and make reference to the existing bond. In International Fishing Vessels v. Minister for Marine [1989] IR 149, Blayney J. emphasised the importance of allowing unsuccessful applicants for licences to improve their application and re-apply. He stated at page 155:
(2) The giving of reasons by the Minister could in one case be of particular importance as it would enable an applicant to meet the grounds on which the licence had been refused and, having done so, re-apply. Sub-section 6 (a) of s. 222B provides that the Minister may refuse an application where it "relates to a sea-fishing boat which is owned by a body corporate and the Minister is not satisfied that the body corporate is under the control of, beneficially owned by or under the control of and beneficially owned by a person or persons who, or, as may be appropriate, each of whom, is either a qualified individual or a qualified body."If an application were being refused under this provision, it seems to me that it would be manifestly unfair for the Minister not to make it known because the ground for the refusal could be overcome by making changes in the control or ownership of the corporation, and the party applying should not be deprived of the opportunity of doing this. It seems to me, accordingly, that in any case in which the applicant is a corporation the Minister should be required to give reasons for his decision as otherwise the party applying would not know if the application was being refused under sub-s. 6 (a) or for some other reason. Therefore, the procedure under the 1982 Act, which involves the right of the applicant to receive reasons and the right to make submissions thereupon, seems to imply that the applicant must put forward his best case before the making of the decision to revoke and not afterwards. The notification of concern of proposed revocation should be sufficient to spur a licence-holder into action, without the respondent needing to follow through on that proposal. The duty on the applicant is to respond with sufficient information to make its case. In light of this, I am of the opinion that I should assess the decision of the respondent in light of the situation which prevailed on the date of the decision. The Test on Appeal The second preliminary issue before the Court is that of the test to be applied on appeal. In that regard, there are a number of possibilities. The first is that this appeal under the 1982 Act is a complete re-hearing in the sense of a de novo appeal from the Circuit Court to the High Court. In such cases the judge knows nothing, for instance, of what the Circuit Court has decided, what the level of damages was etc. The file is sealed and the Court never sees it. The application of that approach to the appeals process under section 9 of the 1982 Act cannot be correct. This court has no expertise in finance or accountancy, nor does it have expertise in policy. This court has never had the opportunity to see or hear from the human persons who control the applicant. This court has never had the opportunity to assess whether they are serious-minded people or not, it simply assumes that they are. The respondent, by way of contrast, has such expertise and has had such opportunities. I should say that this is not simply a question of curial deference, with which I have potential problems. Rather, the legislature has quite deliberately established a body with expertise in accountancy matters, which the courts never adjudicate upon unless they are raised in plenary proceedings and a conflict of evidence arises, which also has the capacity to hold face to face interviews in making its assessment. I therefore dismiss as incorrect any suggestion that these proceedings should be classed as a complete re-hearing. I also dismiss as incorrect, following the decision of Orange Communications v. Director of Telecommunications [2000] IESC 22, any notion that this process is a regular judicial review and that I am exercising jurisdiction solely in relation to procedure and the very high standard of unreasonableness that must be reached before the High Court can overturn and administrative decision. In Orange, Keane C.J. reviewed a number of decisions and stated as follows at pages 117-119:
It seems to me, therefore, that before a decision can be overturned on appeal, the relevant statutory provision must be considered in the context of the Act as a whole, following which a number of considerations must be addressed:
(2) If the court is empowered to impose conditions, for example because a successful appeal will automatically cause a licence to issue, it will be necessary for the court to consider what conditions, if any, ought to be imposed. (3) If the body whose decision is being appealed is a specialist body, with expertise in policy or a discipline such as accountancy, this must be taken into account. (4) The court must establish the intention of the legislature in creating the appeals mechanism, in particular the intended relevance of the original decision to the appeal proceedings; should the original decision be considered in detail or should the process operate akin to a de novo appeal from the Circuit Court to the High Court. (5) The court must consider any powers which it has to gather information or, just as important, the absence of any power to gather information as this indicates that the original decision making body is what is being reviewed, not that the High Court is entering the process itself. (6) The effect of the original decision must be addressed. In this instance, I note that once the decision of the respondent was posted on its website, the applicant complained that a detrimental effect on its business was noticeable. (7) The court ought to have regard to whether the statutory scheme allows the decision making body to actually meet with the applicant and therefore make a judgment as to credibility or reliability. Conclusions Having considered all of those points in the context of the case law, I feel that I am bound to follow the decision of Keane C.J. in Orange. The test of serious and significant error, as identified by the Supreme Court in that case, requires an assessment of whether the decision in question was unreasonable, in other words, whether there is a mistake of fact which goes to the foundation or root of the decision. In respect of the decision of the 24th of October, a number of complaints have been made by the applicant. Firstly, it is alleged that the decision assumes that the Revenue Commissioners will not pay the VAT refunds to which the applicant is entitled. Secondly, it is suggested that the decision does not specify that the directors' loans need to be converted to capital. Thirdly, a failure to have regard to the injection of one million euro into the company is alleged. Fourthly, it is claimed that the decision is based on an incorrect asset to liability ratio. Fifthly, it has been submitted that the decision of the respondent ought to have specified the steps which the applicant could have taken in order to secure a renewal of the licence. Three months in the lifespan of a tour operator or a travel agent is quite a long time. I am satisfied that the respondent was entitled to make the decision that it made in relation to VAT because that is the expected waiting period before a decision is made on a refund. I think the respondent did have regard to the fact that there was a conversion of the directors' loan, which after all is fresh capital, but I also think it reasonably viewed it as having, in effect, been used up in the previous financial year. This is a view which I think the respondent was entitled to take. I do not think it incumbent on the respondent to establish the precise asset to liability ratio, rather it is the duty of the respondent to take a reasonable view of what that should be and then submit appropriate accounts that will show a healthy and secure company to the respondent. Furthermore, it is not for the respondent to indicate what steps need to be taken before a licence will be renewed. Instead, the onus is on an applicant to propose measures in order to satisfy the respondent that its operation remains financially sound, to such an extent that the respondent should permit it to trade in a volatile commercial sphere. Finally, on the question of the adequacy of the consultation which took place, I note the multiple letters which were exchanged and the numerous meetings between the parties, as well as the memorandum of the 22nd of October and the decision of the 24th of the same month. Decision It may of course be argued that what has happened subsequent to the respondent’s decision has in some way altered the applicant’s suitability for a licence. As I have said, the respondent is entitled to reconsider its determination because it is not functus officio. However, for the purposes of this appeal, the respondent did not act unreasonably in the sense in which I have defined that term in remaining concerned as to the applicant’s financial stability and in holding the view that the applicant does not meet the criteria set down in the 1982 Act. In those circumstances there is nothing that I can do but affirm the respondent’s decision of the 24th of October 2008. |
