Neutral Citation Number:  IEHC 530
THE HIGH COURT
[2013 No. 4961 P.]
MR. JUSTICE KELLY
MRS. JUSTICE FINLAY GEOGHEGAN
MR. JUSTICE HOGAN
THE MINISTER FOR FINANCE, IRELAND AND
THE ATTORNEY GENERAL
JUDGMENT of the Court delivered on the 26th day of November, 2013
1. The plaintiff is a Dáil Deputy for the constituency of Dublin South Central. She was first elected following the General Election which was held in February, 2011. In these proceedings the plaintiff challenges the vires and constitutionality of the procedure whereby over €30bn. was given by the State by way of financial support to two particular credit institutions, namely, Anglo Irish Bank and Educational Building Society. This was done by means of promissory notes issued by the Minister for Finance on various dates in 2010. The impugned promissory notes are those issued to EBS and Anglo on 17th June 2010 and 22 December 2010 respectively. It is agreed that there was no separate vote in Dáil Éireann in respect of these notes. Apart from the intrinsic importance of the validity of this procedure, the plaintiff has also raised a series of constitutional questions in relation to the operation of the State’s finances many of which have heretofore received little or no judicial consideration.
Part I - Introduction
The bank guarantee and the enactment of the 2008 Act
2. The collapse of the US investment bank Lehman Brothers on 15th September, 2008, caused a systemic shock to the world financial system and immediately plunged many leading economies into a deep crisis. This collapse triggered a panic on international financial markets. It was a crisis which left the Irish banking system hugely exposed as it was heavily dependent on short-term funding from that inter-bank market. By the end of September, 2008 some Irish credit institutions – who were otherwise bereft of funding - were close to collapse.
3. The Government was confronted with a difficult series of choices. By the end of September, 2008 the choice was either to provide some form of financial support to credit institutions or else face some form of widespread banking collapse. The Government decided to guarantee the financial liabilities of the banks with effect from 28th September, 2008. Following an announcement to this effect, legislation to give effect to this commitment quickly followed. The Credit Institutions (Financial Support) Act 2008 (“the 2008 Act”) was then enacted into law on 2nd October, 2008.
4. It had, perhaps, been hoped that the difficulties which the banks encountered in that Autumn of 2008 represented a liquidity rather than a solvency crisis. These hopes were dashed over the course of the next two years when a wave of fresh capital calls materialised in the wake of detailed assessments and audits of the banks’ capital requirements. The extent of the payments required was thought to place undue burdens on the State’s capacity to meet these capital calls. Faced with unsustainably high bond yields on Government debt, by November, 2010 the Government sought financial assistance from the International Monetary Fund, the European Commission (on behalf of the EU and certain Eurozone states) and the European Central Bank. Three other non-Eurozone states – the United Kingdom, Sweden and Denmark – also provided bi-lateral loans and loan guarantees.
5. The Court is fully aware that the decisions made at that time were (and still are) hugely controversial. We would emphasise, however, that neither the enormity of these decisions or their consequences nor their controversial character have any direct bearing on the legal and constitutional issues which we are now called upon to consider.
6. Article 5 of the Constitution provides for the democratic nature of the State and it accordingly follows that decisions of the type just described are entrusted in the first instance to the executive and legislative branches of government who must ultimately account to the people in the electoral process. As Hogan J. observed in a somewhat similar context in MacDonncha v. Minister for Education and Science  IEHC 226:
7. It is no part of this Court’s function to express any view on and still less to review the political or economic wisdom of the decisions which culminated in the 2008 Act. Rather it is to consider the quite separate questions of the vires and the constitutionality of the procedures by which the Minister for Finance subsequently issued the promissory notes in suit under the provisions of that legislation. As we shall presently see, at the heart of the plaintiff’s case is the question of whether public moneys can be voted and appropriated (whether by means of a vote in Dáil Éireann or a law passed by the Oireachtas) without an upper limit being specified by that vote or in that legislation.
“….even if the judicial branch possessed – which it does not - the skill and understanding of a Keynes or a von Hayek or a Friedman or a Krugman in matters of general macroeconomic theory, this would not alter matters in the slightest. This is because questions of the wisdom, efficacy and general fairness of these policies are committed exclusively to the democratic process. Article 5 of the Constitution proclaims the State to be a democracy and this means that questions of general economic policy of this nature are committed to the two branches of government which are ultimately answerable to the People in the electoral process.”
The background to the 2008 Act and the subsequent legislation
8. The terms of the 2008 Act are of central importance to the present proceedings and require to be considered in full. The 2008 Act was enacted on 2nd October, 2008. It was passed against the background of the events of the previous month and the persistent turbulence then subsisting on international capital markets. This is clearly reflected in both the long title and s. 2 of the 2008 Act.
Part II – The Legislative Framework
9. The long title provided:-
10. Perhaps reflecting the exceptional character of the legislation and the nature of the threat then confronting the economy of the State, s. 2 of the 2008 Act detailed the purposes of the legislation in the following terms:
“An Act to provide, in the public interest, for maintaining the stability of the financial system in the State and for that purpose to provide for financial support by the Minister for Finance in respect of certain credit institutions, to amend the Competition Act 2002 and other enactments, and to provide for connected matters.”
11. Section 6 is, however, the key provision which enabled the Minister to give the requisite financial support. “Financial support” was defined in s. 1 of the Act as including a loan, a guarantee, an exchange of assets and any other kind of financial accommodation or support. Section 6 of the 2008 Act authorises the Minister to provide financial support for credit institutions as and from the relevant date (being 30th September, 2008) as follows:-
“(1) The Minister has, in the public interest, the functions provided for under this Act because, after consulting the Governor and the regulatory authority, the Minister is of the opinion that-
(a) there is a serious threat to the stability of credit institutions in the State generally, or would be such a threat if those functions were not performed,
(b) the performance of those functions is necessary, in the public interest, for maintaining the stability of the financial system in the State, and
(c) the performance of those functions is necessary to remedy a serious disturbance in the economy of the State.”
Finally, s. 6 (12) provides:
“(1) As and from the relevant date [and in accordance with this section] 1, the Minister may provide financial support in respect of the borrowings, liabilities and obligations of any credit institution or subsidiary which the Minister may specify by order having regard to the matters set out in s. 2, the extent and nature of the obligations (including the degree of control over possible abuse of the financial support) undertaken and which might be undertaken in the future and the resources available to him or her in that behalf.
(2) In subsection (1) a reference to borrowings, liabilities and obligations includes borrowings, liabilities and obligations to the Central Bank or any person.
(3) Financial support shall not be provided under this section for any period beyond 29th September 2010, and any financial support provided under this section shall not continue beyond that date.
(4) Financial support may be provided under this section in a form and manner determined by the Minister and on such commercial or other terms and conditions as the Minister thinks fit. Such provision of financial support may be effected by individual agreement, a scheme made by the Minister or otherwise. Without prejudice to the Minister’s discretion as to such conditions, all financial support provided shall so far as possible ultimately be recouped from the credit institution or subsidiary to which the support was provided.
(5) Where the Minister proposes to make a scheme under subsection (4) —
(a) he or she shall cause a draft of the proposed scheme to be laid before each House of the Oireachtas, and
(b) he or she shall not make the scheme unless and until a resolution approving of the draft has been passed by each such House.”
12. Section s. 6(3) was amended by the Second Schedule of the Financial Measures (Miscellaneous Provisions) Act 2009. As thus amended, s. 6(3) of the 2008 Act provides:
13. The Minister for Finance has, in fact, exercised his powers under the amended provisions of s. 6(3) by making a series of statutory instruments from time to time extending the last date for the provision of financial support. The power was exercised most recently by means of the Credit Institutions (Financial Support)(Financial Support Date)(No.2) Order 2012 (SI No. 520 of 2012). This Order had the effect of extending the final date for the provision of financial support until June 30, 2018.
“All money to be paid out or non-cash assets to be given by the Minister under this section may be paid out of the Central Fund or the growing produce thereof.”
14. Section 6 was further amended by s. 74 and Part 1 of the Credit Institutions (Stabilisation) Act 2010 (“the 2010 Act”). As thus amended, s. 6(1) provided in relevant part as follows:
15. These provisions of s. 6(1) were commenced on December 21, 2010: see Credit Institutions (Stabilisation)Act 2010 Commencement Order 2010 (S.I. No. 623 of 2010).
"(1) As and from the relevant date, and in accordance with this section, the Minister may provide financial support directly or indirectly to any current or former credit institution or current or former subsidiary of a credit institution or former credit institution which the Minister may specify by order having regard to-
(a) the matters set out in section 2,
(b) the extent and nature of the obligations (including the degree of control over possible abuse of the financial support) undertaken and which might be undertaken in the future, and
(c) the resources available to him or her for that purpose.
(1A) For the purposes of this section, the provision of indirect financial support includes the provision of financial support to a person (in particular, a company whose objects include the provision of such financial support) in connection with financial support provided or to be provided by that person to-
(a) a credit institution or former credit institution or current or former subsidiary of a credit institution or former credit institution, or
(b) credit institutions (including former credit institutions and current or former subsidiaries of credit institutions or former credit institutions) generally.”
Part III – The issuing of the promissory notes and
The circumstances in which the Anglo and EBS promissory notes were issued.
16. It is not in dispute but that the recapitalisation of the various credit institutions under the powers given by the 2008 Act has to date cost the best part of €64bn. The extent to which any of this money is likely to be recovered will remain uncertain for many years to come, but to date only a small fraction of these monies has actually been repaid. For our purposes, however, it is sufficient to focus on the manner in which funds were disbursed by the State by way of promissory note arrangements in favour of both Anglo and the Educational Building Society (“EBS”). The Irish Nationwide Building Society was merged with Anglo in July 2011 and Anglo changed its name to the Irish Bank Resolution Corporation (“IBRC”) in October 2011. The EBS was later acquired by Allied Irish Banks.
the unwinding of the Anglo note in February 2013
17. During the course of 2009 and 2010 a sum of €4.1bn.was advanced by the Minister for Finance to Anglo in the form of ordinary equity and special investment shares. In 2010 a variety of promissory notes were issued in favour of Anglo, culminating in the issue by the Minister for Finance of a final note (which replaced earlier notes) in December, 2010 in the sum of €30.6bn. This capital contribution then rendered Anglo technically solvent and the notes were then pledged as collateral for exceptional liquidity assistance (“ELA”) provided by the Central Bank under a Special Master Repurchase Agreement.
18. In the case of the EBS capital was provided by way of €625m. in the form of special investment shares and €250m. by way of a promissory note.
19. Ms. Nolan gave evidence (Day 2, Qs. 47-64) that payments under the promissory notes were subsequently recorded as a line item in the Non-Voted Capital Expenditure section of the White Paper of Estimates of Receipts and Expenditure which was presented by the Government to the Dáil in accordance with Article 28.4.4 of the Constitution. It is accordingly perfectly clear that Dáil Deputies were fully aware of the existence of these payments and duly considered them as part of the budget process in both December, 2011 and December 2012, even if there was no separate vote in advance of the issuing of these noted by the Minister.
20. The Irish Bank Resolution Corporation Act 2013 (“the 2013 Act”) was enacted by the Oireachtas on 7th February, 2013. It provided for the immediate liquidation of the IBRC and it provided for the procedure whereby the Anglo promissory notes were effectively unwound and cancelled. The Long Title to the 2013 Act set out the background and purposes of the Act with an unusual degree of specificity:
The un-winding of the Anglo notes following the enactment of the 2013 Act
21. The procedure whereby the promissory notes were cancelled was provided for by s. 17 of the 2013 Act. This provided that:
The Bank is defined as the Central Bank.
AN ACT TO PROVIDE FOR THE WINDING UP OF IBRC AND TO PROVIDE FOR CONNECTED MATTERS.
WHEREAS it is necessary, in the public interest, to provide for the orderly winding up of the affairs of IBRC to help to address the continuing serious disturbance in the economy of the State;
AND WHEREAS vital assistance has been provided by the State to maintain the functioning of IBRC to support the financial stability of the State;
AND WHEREAS vital assistance has been provided by the Central Bank of Ireland to maintain the functioning of IBRC to support the stability of the Irish financial system;
AND WHEREAS the maintenance of the functioning of IBRC is no longer necessary to support the financial stability of the State or the stability of the Irish financial system;
AND WHEREAS it is necessary to end the exposure of the State and the Central Bank of Ireland to IBRC;
AND WHEREAS the winding up of IBRC is now necessary to help to restore the financial position of the State and to help to enable the State to re-establish normalised access to the international debt markets;
AND WHEREAS it is necessary in the public interest to ensure that the financial support provided by the State to IBRC is, to the extent achievable, recovered as fully and efficiently as possible;
AND WHEREAS the winding up of IBRC is necessary to resolve the debt of IBRC to the Central Bank of Ireland;
AND WHEREAS in the achievement of the winding up of IBRC the common good may require permanent or temporary interference with the rights, including property rights, of persons….”
22. Section 17 was thus the vehicle whereby the Anglo promissory notes were returned to the Minister for Finance and cancelled. We are satisfied on the unchallenged evidence of Ms. Nolan in particular that the Central Bank was at this stage the effective economic owner of the notes, given that the notes had been pledged as collateral by Anglo/IBRC to the Central Bank in return for the ELA. Ms. Nolan also gave evidence that pursuant to a Special Master Repurchase Agreement the ownership of the notes would vest in the Central Bank in the event of a default event such as the liquidation of Anglo/IBRC. Recalling here that the first tranche of €3.06bn. had been actually redeemed by a cash payment in 2011 and the second payment was made by a special bond issue, the liability of the State for the remaining sums which had been due under the Anglo notes was approximately €25bn.
23. That sum did not, however, disappear and the ultimate liability of the State for these sums remains. What happened instead was that the note was replaced by long-dated and non-amortising Government bonds, comprising of three tranches of €2bn. maturing after 25, 28 and 30 years; three tranches of €3bn. each maturing after 32, 34 and 36 years and two tranches of €5bn. maturing after 38 and 40 years. The evidence was that these arrangements have significant advantages for the financial position of the State. Amortising promissory notes were replaced with non-amortising long-dated bonds with a maturity date well beyond the time horizon of contemporary capital markets. She further observed that the arrangements had significant cash flow benefits for the State.
24. The only remaining promissory note issued under s. 6 of the 2008 Act remains the EBS note.
Whether the plaintiff has the requisite locus standi
25. The locus standi issue which arose in the present proceedings had previously been raised in Hall v. Minister for Finance  IEHC 39. In that case Kearns P. held that an ordinary member of the public did not have the requisite standing to challenge the failure on the part of Dáil Éireann to vote on the issuing of the promissory notes. Such a challenge could be brought only by a member of the Dáil which the plaintiff in that case was not. As it happens, towards the end of the hearing, a solicitor representing three Teachtaí Dála (including the plaintiff) appeared to suggest that the three deputies might wish to join those proceedings, but, for various reasons, this never materialised.
Part IV – Locus Standi and Mootness
26. Kearns P. said:
27. An appeal was taken against this decision. The Supreme Court was initially required to consider whether five named Dáil Deputies (including the plaintiff) could be added to the proceedings at the appeal stage. In his judgment Fennelly J. refused to permit this course of action on the ground that this would radically change the nature of the proceedings: see Hall v. Minister for Finance  IESC 39. The main appeal against this judgment of Kearns P. regarding the question of Mr. Hall’s standing has yet to be heard by the Supreme Court.
28. So far as the present case is concerned, the plaintiff has, of course, been elected as a Teachta Dála since March 2011 and, based on the authority of the decision of Kearns P. in Hall, she would have had the requisite standing to maintain the present proceedings in respect of the financial support provided as and from that date. In their pleadings the defendants had originally put at issue her standing to challenge any legislative or administrative act bearing on the issue of a Dáil vote prior to March, 2011. At the hearing of these proceedings, counsel for the Minister expressly withdrew any objection based on locus standi. He indicated that a decision on the substantive issues raised by the plaintiff in these proceedings was being sought by the defendants..
29. In these circumstances it is unnecessary for us to revisit any of the issues raised in Hall. We accordingly proceed as if the plaintiff has the requisite locus standi and that no issue in that regard had ever been raised by the defendants.
Has the challenge to the Anglo notes been rendered moot by the enactment of the 2013 Act and the subsequent unwinding of the promissory notes?
30. This may be a convenient point to deal with another objection raised by the Minister, namely, that the proceedings had been rendered moot by the enactment of the 2013 Act and, specifically, by the surrender of the Anglo note and the issuing of new long term Government bonds. In this regard, however, we agree with the plaintiff’s submission that the powers contained in s. 17 of the 2013 Act assume and pre-suppose that any liabilities incurred by the Minister were validly incurred. It may be observed that s. 17(1) speaks of liabilities and obligations of the Minister to the Central Bank, which terms we understand to refer to liabilities and obligations lawfully incurred.
31. If, as the plaintiff contends, the Minister had acted wrongfully or in an unconstitutional fashion by issuing the promissory note in the first instance, then there would have been no lawful liability or obligation to the Central Bank and in these circumstances the exercise of the s. 17 powers by the Minister would have been unlawful. It follows, therefore, that the mere fact that the notes were unwound using the procedure provided by s. 17 does not extinguish the antecedent question of whether there were lawful liabilities and obligations in the first place. In these circumstances, the case made by the plaintiff cannot be adjudged to have been rendered moot on this ground.
32. Many critical facts concerning the operation of the 2008 Act were agreed and not in dispute. The parties submitted an agreed statement of facts which is appended to this judgment. The Court also had the benefit of hearing from six witnesses, namely, the plaintiff, Mr. Anthony Linehan, Mr. Jimmy McMeel, Professor Anil Shivdasani, Ms. Ann Nolan and Mr. Robert Downes, all of whom had helpfully provided extended witness statements. Their evidence (including their witness statements) was considered in its entirety by the Court but can be briefly summarised as follows:
Part V – The evidence of the witnesses and the Court’s findings thereon
33. The plaintiff gave evidence that she had been involved in public life for many years prior to her election to Dáil Éireann in February 2011. She expressed her reservations regarding the manner in which the public finances of the country had been managed in the lead-up to the financial crash of September, 2008 which left the Irish banks close to collapse. In her view, the financial guarantee and financial support given to the banks after September, 2008 was based on a flawed understanding that the problem was one of liquidity and not one of solvency.
34. Her principal objection in these proceedings was that in 2010 and without further recourse to Dáil Éireann the Minister for Finance appropriated enormous sums of public funds in favour of the banks. This hugely indebted the State. It ultimately culminated in the Government having to resort to the “troika” of the IMF, EU and ECB for outside external assistance in November, 2010 when yields on Irish sovereign debt reached unsustainable levels.
35. The plaintiff explained the background to her involvement in the Hall proceedings (which we have already described). She went on to describe the process whereby the promissory notes were issued.
36. While she was not a member of the Dáil in 2010, she expressed grave doubt as to whether it would have approved the steps taken by the Minister for Finance in relation to the issue of the promissory notes had it had an opportunity to vote on such a measure. She considered it remarkable that in a parliamentary democracy such as ours a decision of such moment and with such long term implications for society at large could be taken by one person who was, for the purposes of the decision, independent of Dáil Éireann.
37. Mr. Linehan gave evidence that he was Deputy Director, Funding and Debt Management of the National Treasury Management Agency. Having described the statutory powers to borrow (s. 54 of the Finance Act 1970, as amended), Mr. Linehan stated that all Irish debt issued pursuant thereto constitutes senior, unsecured and subordinated debt. He explained that no fund manager would buy bonds which were subject to parliamentary approval. Sovereign debt traded in the international bond markets is regarded by all market participants as the direct, unconditional and irrevocable obligation of the issuer of that debt. There is no sovereign debt which is made conditional on continuing parliamentary approval for its repayment once issued.
38. Mr. Linehan also stated that he considered that the ability to raise debt is key to the functioning of the State unless it is to run balanced budgets each year and avoid any deficits. To raise debt at sustainable costs it is necessary that the debt conform to international standards as to conditionality. A requirement that any debt issuance was subject to parliamentary vote might well cause yields on Irish sovereign debt to rise to unsustainable levels.
39. Mr. McMeel has been an officer attached to the Department of Finance since 1993. Since 2005 he has been in charge of the Paymaster General’s Office. Mr. McMeel gave a detailed account of the State’s financial procedures. He explained the difference between “voted” and “non-voted” expenditure, the operation of the Central Fund (Permanent Provisions) Act 1965, the nature of the financial resolutions passed by the Dáil for the purposes of Article 17.1.2 and the annual Appropriation Acts.
40. Mr. McMeel maintained that the promissory note was regarded as an item of non-voted capital expenditure. For payments made by the Minister under the 2008 Act the implicit limit was the amount of capital required at any given point of time so that the credit institution was kept solvent and could operate under the rules relating to the banking sector.
41. Mr. McMeel also considered that a requirement that the raising of moneys would require prior approval by the Dáil would render Irish bonds unmarketable at realistic yields. He thought that market participants would not choose to purchase Irish bonds which carried such a risk. Other countries do not have such a requirement.
42. Mr. McMeel also gave examples of other items of legislation where the Oireachtas had legislatively provided for State liability without any pre-determined limit. Thus, for example, by enacting the Postal and Telecommunications Services Act 1983, the State (or, more strictly, the then Minister for Posts and Telegraphs) had accepted liability (without any upper limit) for accrued pension liability for staff transferred from the civil service to the newly created An Post and Bord Telecom Éireann. The State had likewise accepted an open ended liability for a four year period in respect of any deficiency in the prize fund of the Irish Hospital Sweepstake. This potential liability was charged on the Central Fund: see s. 6 of the Public Hospitals (Amendment) Act 1990.
43. Professor Shivdasani was the expert witness called by the defendants. He is the Wachovia Distinguished Professor of Finance at the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill. He was previously Managing Director of the Investment Banking Division of Citigroup Global Markets Inc. His expertise is in the areas of corporate financial policy, financial institutions and financial markets. He has written extensively on the effect of the US banking bailout.
44. As with the other witnesses, Professor Shivdasani described the background to the promissory notes and the circumstances in which such assistance was given. He stressed that the notes were financial assets with economic value and he went on to say that:-
45. Professor Shivdasani went to say that the issuing of the promissory notes boosted the balance sheets of the recipient banks and automatically improved their core Tier 1 capital ratios. From the perspective of capital markets, financial support was provided by the Minister for Finance as of the date the notes were issued. He considered that from this perspective, subsequent payments that fulfilled the obligations of the Minister for Finance arising from the issuing of the notes did not represent the provision or giving of financial support in this sense.
“The promissory notes are functionally equivalent to a sovereign bond issued by the Government of Ireland. Like an investor in Irish sovereign bonds, institutions that were issued promissory notes had the right to receive periodic payments from the Government of Ireland and bore the default risk of the Irish government. Similar to the economic value of a sovereign bond, the promissory notes had economic value to the institutions on the date that they were issued and therefore represent a contribution of capital on the issuance date. The fact that there was no transfer of cash that occurred on the date of issuance does not imply that economic value was not provided to the Irish institutions at the time the notes were issued.”
46. Ms. Ann Nolan gave evidence that she was the Second Secretary General of the Department of Finance with responsibility for the Financial Services Division. She has occupied that position since 2010. She previously held other senior positions within that Department.
47. Ms. Nolan gave evidence as to the manner and extent to which the banks and credit institutions were given financial support and recapitalised since 2008. She stated that a decision had been taken to recapitalize Anglo because, given its systemic importance in the banking sector, if this did not happen there would have been a grave risk to the financial stability of the State itself.
48. Ms. Nolan further explained that the promissory note was regarded by the recipient banks (specifically Anglo) as the equivalent of capital and was so treated in Anglo’s balance sheet. Anglo/IBRC could then pledge the note to the Central Bank as collateral under what was known as a special master repurchase agreement in order to receive emergency liquidity assistance (“ELA”). The ELA was designed as short-term liquidity so that these agreements were rolled over every two weeks or so. The agreement provided that in the event of the liquidation of IBRC, the ownership of the note would vest in the Central Bank.
49. The promissory note was then returned to the Minister for Finance in the wake of the liquidation in exchange for the issue of fresh bonds which were issued under s. 17 of the Irish Bank Resolution Corporation Act 2003. No fresh borrowing was involved: the note was simply exchanged in return for the new bonds.
50. Ms. Nolan further explained that the amounts committed by way of the promissory notes were detailed in the White Paper of Estimates and Receipts for 2012 and 2013 which accompanied the presentation of the budgets in December 2011 and December 2012 respectively. The White Paper is supplied by the Government to the members of Dáil Éireann in the manner required by Article 28.4.4.
51. Mr. Downes gave evidence that he was an officer attached to the Department of Finance between 1993 and 2011. He was then transferred to the newly created Department of Public Expenditure and Reform. Between 2007 and 2013 he was the principal officer in charge of Central Expenditure which is the section which is responsible for preparing the annual Estimates of Voted Expenditure. This process involves the management and running of the annual Estimates process and the preparation of the annual Estimates Volume.
52. In that regard, his expertise was in dealing with voted expenditure through the Estimates process. He narrated the inter-play between the operation of the Central Fund (Permanent Provisions) Act 1965 and the annual Appropriation Act. He was exclusively concerned with voted expenditure and it was common case between the parties that the promissory notes fell into the category of non-voted expenditure.
The Court’s findings of fact
53. The majority of the facts were agreed. However, in the light of the (largely unchallenged) oral testimony tendered, we also find as follows:
54. First, the State’s borrowing capacity would be seriously eroded if borrowing was subjected to a parliamentary vote.
55. Second, once a decision was made to save the banks from financial collapse, the injection of large sums of capital by the State was necessary to enable them to trade as solvent entities and to maintain appropriate capital ratios. Accordingly, the provision of the promissory notes (some €30.6bn.) were necessary to enable Anglo/IBRC and the EBS to meet their respective capital ratios at the relevant time.
56. Third, the promissory notes were treated as immediate capital on the balance sheets of the recipient banks.
57. Fourth, Anglo/IBRC had pledged the promissory note to the Central Bank as collateral for the receipt of ELA. Pursuant to the Special Master Repurchase Agreement on the liquidation of the IBRC, ownership of the note vested in the Central Bank. Accordingly, at the date of that liquidation, the Minister for Finance was indebted to the Central Bank in respect of the promissory note. That note was subsequently returned to the Minister in exchange for Government bonds issued under s. 17 of the Irish Bank Resolution Corporation Act 2013.
58. Before considering the constitutional arguments, in accordance with established practice the Court will first examine the plaintiff’s non-constitutional arguments based on the vires of the Minister’s statutory powers. These arguments can be grouped together under three separate headings.
Part VI – The plaintiff’s vires arguments
59. First, did the provision of financial support by the promissory notes exceed the permitted time limits under s. 6(3) of the 2008 Act (as amended)? Second, do the words contained in s. 6(1) of the 2008 Act which provides that in giving financial support to credit institutions the Minister shall have regard to “the resources available to him or her for that purpose” imply that the Dáil would first appropriate monies for this purpose prior to the Minister giving such support? Third, assuming that the Anglo/IBRC promissory notes were validly created without the necessity for a separate Dáil vote (an issue which is considered later in Part VIII), did they constitute a liability or obligation of the Minister to the Central Bank for the purposes of s. 17 of the 2013 Act. We now consider these questions in turn.
The temporal argument
60. Section 6(3) of the 2008 Act as originally enacted provided
61. There were, therefore, two features to the original s. 6(3). First, financial support could not be provided for any period after 29th September 2010 and, second, financial support could not continue beyond that date.
”Financial support shall not be provided under this section for any period beyond 29th September 2010, and any financial support provided under this section shall not continue beyond that date.”
62. Section 6(3) as amended in 2009 only contains one restriction. It provides: “Financial support provided under this section shall not continue…” beyond 29th September 2010 or a later date specified by Ministerial order. There was no longer a prohibition against providing financial support for a period after the specified date. This was the applicable provision when the impugned notes were issued in June and September 2010.
63. As of the date on which the impugned notes were issued in June and December 2010, the date specified was 31st December 2015: see Credit Institutions (Financial Support)(Financial Support Date) Order 2010 (SI No. 471 of 2010). That latter date has itself been later extended from time to time and the Credit Institutions (Financial Support)(Financial Support Date)(No.2) Order 2012 (S.I. No. 520 of 2012), now specifies the date for the purposes of s. 6(3) to be 30th June, 2018.
64. The EBS and Anglo notes each when issued in 2010 provided for payments to be made on dates after 31st December 2015.
65. As we have already noted, Professor Shivdasani gave evidence that from the perspective of capital markets, it was the issuing of the promissory note in favour of the two credit institutions in 2010 which amounted to the provision of financial support. Once issued, the promissory note then could be valued as an item on the bank’s balance sheets and the market was not concerned – at least so far as the beneficiary of the note was concerned - with the fact that the State had to raise extra sources of finance to meet its obligations under the note. We fully accept this evidence which was not, in any event, seriously challenged. The financial support given by the issue of the EBS and Anglo notes in 2010 was provided on the date of issue of the notes in June and December 2010.
66. In enacting the amendment to s.6(3) of the 2008 Act in 2009 what the Oireachtas did was to impose a cut-off date for the continuation in being of financial support provided under the 2008 Act. This imposes the final date on which actual payments may be made by the State to credit institutions, irrespective of how, for example, the promissory notes were or would be treated either by capital markets or for general accountancy purposes. This is underscored by the words used that the financial support provided under s.6 “shall not continue beyond . . .”, so that the prohibition is apt to both the keeping in place of the promissory note after the cut-off date as well as the continued payment obligations of the Minister of Finance pursuant to a promissory note.
67. However, under s.6(3) as amended there was no prohibition in June or December 2010 which prevented the Minister from providing financial support on those dates by a promissory note which had the potential to continue in being or provided for payments to be made after the then specified date of 31st December 2015. As noted above, the Oireachtas in the 2009 amendment had removed the prohibition against providing financial support for a period after the specified date.
68. It follows, accordingly, that the issuing of the two notes was perfectly valid on the date that they were issued in June and December 2010, even if the notes themselves contemplated further payments by the Minister for Finance thereunder after the cut-off date. What s. 6(3)(as amended) does not permit is either the keeping in place of a promissory note after the cut-off-date or the payment of financial support represented by payments by the Minister for Finance under the note after the cut-off date or (in both instances) such later cut-off date as might be prescribed by ministerial order.
Conclusions on the temporal issue
69. In the case of the Anglo note, from a temporal perspective it was intra vires the Minister’s powers under s.6(3) as amended when issued. Further the two payments thereunder (one of which was in cash and the other in bonds) were within the relevant cut-off date. It is now cancelled so no further issue arises..
70. The situation with regard to the EBS note is somewhat different. Similarly it was intra vires when issued. Its continued existence is not now prohibited by reason of the current date of 30th June 2018 specified by the Credit Institutions (Financial Support)(Financial Support Date)(No.2) Order 2012 (S.I. No. 520 of 2012). The Minister is obliged under that note to make payments (for admittedly much smaller sums than would have been the case in the case of the Anglo/IBRC note) for periods which are likely to exceed the present cut-off date of June, 2018. In these circumstances s. 6(3) precludes both keeping the EBS note in place and the making of further payments under that note after the present cut-off date of June, 2018 unless a further statutory instrument is promulgated by the Minister under s. 6(3)(b) of the 2008 Act (as amended) extending the cut-off date.
The meaning of the phrase “the resources available to him or her for that purpose” in s. 6(1)(c) of the 2008 Act
71. The second vires question is whether the words contained in s. 6(1)(c) of the 2008 Act (which provide that in giving financial support to credit institutions the Minister shall have regard to “the resources available to him or her for that purpose”) imply that the Dáil would first appropriate monies for this purpose by means of a separate vote prior to the Minister giving such financial support?
72. This, in many ways, is but a variant in a specific statutory context of the argument which we will later address in the context of the interpretation of Article 11 and Article 17 of the Constitution. We think nevertheless that the argument is not well founded for the following reasons.
73. First, it must be recalled that the 2008 Act was enacted in the torrid early days of October, 2008 against the backdrop of a major international crisis which seriously threatened the economic well-being of the State. In so far as there was any doubt about this, the terms of s. 2 of the 2008 Act are sufficient to demonstrate that the Oireachtas well understood the gravity of the unfolding crisis. In that fluid and dynamic situation, the Minister could not have provided any reliable estimate to the Dáil at the time of the passage of the legislation through the Oireachtas of the precise amounts of financial support which the banks would ultimately require. It is true that the amounts which the banks ultimately required exceeded the worst fears and forecasts which then prevailed. But this in its own way simply serves to make the point that it would be unrealistic to construe s. 6(1)(c) in the way suggested by the plaintiff because neither the Minister nor the Dáil knew or could have known the amounts which ultimately might be or would be required.
74. Second, in any event, this argument overlooks the import of s. 6(12) of the 2008 Act which provides that the financial support “shall be paid out of the Central Fund or the growing produce thereof.”
75. It follows, therefore, that the financial assistance given under s. 6 fell into the category of non-voted expenditure. Section 6(12) is an authorisation to pay from the Central Fund without the necessity for a further Dáil vote. These, accordingly, are the resources available to the Minister within the meaning of s. 6(1)(c). Had the intention been that the expenditure by way of financial support to the banks should be contingent on a further vote in the Dáil or in the wider Oireachtas, then s. 6(12) would doubtless have contained words to the effect that the financial support given by the Minister “shall be paid out of the moneys provided by the Oireachtas.”
76. Counsel for the defendants drew our attention to s. 33 of the Anglo Irish Bank Corporation Act 2009, where all of these terms are juxtaposed and show the consistent usage of statute in this regard:
77. It follows, therefore, that we cannot construe s. 6(1)(c) in the manner suggested by the plaintiff. To do so would be inconsistent with the plain import of s. 6(12). Unless, therefore, the effect of both Article 11 and Article 17 of the Constitution was to require otherwise (a topic to which we will shortly return), we cannot construe s. 6(1)(c) as requiring a separate vote by the Dáil prior to the issue of the promissory notes by the Minister to the banks or the making of payments pursuant thereto.
“(1) The expenses incurred by the Minister in the administration of this Act shall be paid out of the money provided by the Oireachtas and shall be repaid to the Minister from the funds of Anglo Irish Bank.
(2) The expenses incurred in respect of the assessor by the Minister, and any other expenses or expenditure incurred by the Minister under this Act shall be paid from the funds of Anglo Irish Bank or, if that is not possible in the circumstances and the Minister considers it appropriate, out of the Central Funds or the growing produce thereof.”
Did the Anglo/IBRC promissory notes constitute a liability or obligation of the Minister to the Central Bank for the purposes of s. 17 of the 2013 Act?
78. The final vires question is whether, assuming the Anglo/IBRC promissory note was validly created without the necessity for a separate Dáil vote (an issue which is considered later in Part VIII), did the existence of the note constitute a liability or obligation of the Minister to the Central Bank for the purposes of s.17 of the 2013 Act?
79. Section 17(1) of the 2013 Act permitted the Minister for Finance to issue securities “in exchange for or in consideration of the redemption, release or cancellation, or the transfer to the Minister, of any other liability or obligation of the Minister to the Bank.” Section 17(2) provided that any payments required in respect of these securities “may be charged on the Central Fund or the growing produce thereof.” The plaintiff argues that whereas IBRC undoubtedly had an obligation to the Central Bank in respect of the ELA which it had received, the obligation was nonetheless that of IBRC and not that of the Minister.
80. The Court has found as a fact that the Minister was indebted to the Central Bank in respect of the Anglo/ IBRC promissory notes at the date of liquidation of IBRC. Hence it is clear that the Minister did have an obligation or liability to the Central Bank within the meaning of s.17(1) of the 2013 Act on the liquidation of IBRC.
The relevant constitutional provisions
81. Before addressing the plaintiff’s constitutional arguments, it is first necessary to set out certain key constitutional provisions, namely, Article 11, Article 15.2.1, Article 17, Article 28.4.1 and Article 28.4.4.
Part VII – The plaintiff’s constitutional arguments
82. Article 11 of the Constitution provides that:
Article 15.2.1 provides that the “sole and exclusive power of making laws for the State is hereby vested in the Oireachtas.”
“All revenues of the State from whatever source arising shall, subject to such exceptions as may be provided by law, form one fund, and shall be appropriated for the purposes and in the manner and subject to the charges and liabilities determined and imposed by law.”
83. Article 17 provides:
84. Article 28.4.1 provides that the Government “shall be responsible to Dáil Éireann.” Article 28.4.4 provides that:
“(1) 1° As soon as possible after the presentation to Dáil Éireann under Article 28 of this Constitution of the estimates of receipts and the estimates of expenditure of the State for any financial year, Dáil Éireann shall consider such estimates.
2° Save insofar as may be provided by specific enactment in each case, the legislation required to give effect to the financial resolutions of each year shall be enacted within that year.
(2) Dáil Éireann shall not pass any vote or resolution, and no law shall be enacted, for the appropriation of revenue or other public moneys unless the purpose of the appropriation shall have been recommended to Dáil Éireann by a message from the Government signed by the Taoiseach.”
85. Article 33 provides for the appointment of the Comptroller and Auditor General whose task it is to control all disbursements and “to audit all accounts of money administered by or under the authority of the Oireachtas.” As if to emphasise the Dáil’s central role in budgetary matters, it is may be noted that the Comptroller is appointed by the President “on the nomination of Dáil Éireann”: (see Article 33.2.)
“The Government shall prepare estimates of the receipts and estimates of the expenditure of the State for each financial year and shall present them to Dáil Éireann for consideration.”
86. The budgetary system prescribed by the Constitution accordingly envisages that the raising of supply and the appropriation of public monies comes about by reason of the inter-action of the executive and legislative branches. So far as the legislative branch is concerned, Dáil Éireann has the critical role in all budgetary and financial matters. The estimates of expenditure and receipts must be presented by the Government to the Dáil (Article 28.4.4) and it is the duty of the Dáil to consider them (Article 17.1.1). While public monies may not be appropriated save by law (Article 11), the role of Seanad Éireann in the enactment of money bills is strictly circumscribed. A Bill providing for the appropriation of public moneys is defined as a Money Bill (Article 22.1.1) and such a Bill may only be initiated in the Dáil (Article 21.1.1). A Money Bill may not be amended by the Seanad, as the latter’s function in relation to such measures is only to make recommendations (Article 21.1.2) which the Dáil may accept or reject (Article 21.1.2).
87. While public monies may only be appropriated by law in accordance with Article 11, it is quite plain that the executive branch has in practice the dominant role in the initiation and preparation of the budgetary process. Article 28.4.4 accordingly requires the Government to lay the estimates of receipts and expenditure before the Dáil. Furthermore, the Dáil may not pass any vote or resolution “unless the purpose of the appropriation shall have been recommended to the Dáil” by a message from the Government signed by the Taoiseach: see Article 17.2. The entire budgetary process is overseen, as we have just noted, by an independent constitutional officer, the Comptroller and Auditor General.
88. For those versed in the parlance of the budgetary process it is common to differentiate between what is termed voted and non-voted expenditure. In many respects, the term “non-voted” is something of a misnomer, because, of course, every appropriation requires to be voted on at some stage. “Non-voted” expenditure refers, however, to expenditure pursuant to legislation which permanently charges the Central Fund with an expense, of which the payment of salaries for constitutional officers prescribed by statute law and the servicing of the national debt are, perhaps, the most common textbook examples. Absent subsequent legislative change, however, these charges represent a permanent and recurring charge on the Central Fund which, once voted on in the course of the enactment of the relevant legislation, do not require a further vote.
89. In the present case it is agreed that the financial support (including the promissory notes) provided to the banks represents non-voted expenditure in that these payments were originally charged on the Central Fund by s. 6(12) of the 2008 Act. This explains why, assuming for the moment the constitutionality of s. 6 of the 2008 Act, there was no separate Dáil vote on the issuing of the promissory notes.
90. Most expenditure falls, however, into the “voted” category. It is this expenditure which the Dáil is called upon to consider in the estimates procedure (Article 17.1.1 and Article 28.4.4) and it is the resolutions of the Dáil approving such estimates by way of the granting of supply which, subject to specific exceptions otherwise provided for by law, must be given effect in law within that year: see Article 17.1.2. This is done by the annual Appropriation Act which is generally enacted in December of each year.
91. Furthermore, the Central Fund (Permanent Provisions) Act 1965 (“the 1965 Act”) allows for the appropriation of monies representing four fifths of the expenditure allocated for that estimate in the previous financial year pending the vote on the estimates in the current financial year. However, once the Dáil has passed a particular estimate, then that estimate may be drawn down without any further reference to the four-fifths limitation contained in the 1965 Act or the necessity for any further vote. It is only where that estimate is in turn liable to be breached that the Dáil must then be asked to vote further supply by means of a supplementary estimate. In conformity with the requirements of Article 17.1.2, the estimates are then confirmed by the Appropriation Act. In effect, therefore, the appropriation of public money operates somewhat in arrears in that the end of year Appropriation Act gives legislative sanction to that appropriation which has already been spent in the course of the calendar year (whether under the 1965 Act or under the authority of a voted estimate) in anticipation of its ultimate confirmation and authorisation by law.
92. The language of many of the Constitution’s financial provisions is a clear echo of the language contained in Article 1, section 9, clause 7 of the US Constitution which provides:
93. In this respect we could not improve on the following venerable account of the objects of this latter provision found in Mr. Justice Story’s, Commentaries on the Constitution (1833)(at para. 1342) which we think applies perfectly to the relevant provisions of our own Constitution:
“No money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.”
94. It is for precisely these kind of reasons that Article 11 of our Constitution provides for a common fund (subject to such limited exceptions as may be made for by law) and the interposition of the Dáil and the Oireachtas via Articles 11, 17 and 28 are designed to guard against not only the possible excesses of spending by the Government, but also to supply democratic legitimacy to the entire process of spending and appropriation. Both the Dáil and the wider Oireachtas are also subject to restraint, in that by virtue of Article 17.2 neither may appropriate public money without a message from the Government signed by the Taoiseach recommending the purposes of the appropriation. This is a further check and safeguard in that it ensures that the legislative branch may not appropriate public money without the consent of the Government.
“As all the taxes raised from the people, as well as the revenues arising from other sources, are to be applied to the discharge of the expenses, and debts, and other engagements of the government, it is highly proper that Congress should possess an unbounded power over the public purse of the nation and might apply all its monies resources at its pleasure. The power to control, and direct the appropriations, constitutes a most useful and salutary check upon profusion and extravagance, as well as upon corrupt influence…In arbitrary governments the Prince levies what money he pleases from his subjects, disposes of it as he thinks proper, and is beyond responsibility and reproof. It is wise to interpose, in a republic, every restraint, by which the public treasure, the common fund of all, should be applied, with unshrinking honesty to such objects, as legitimately belong to the common defence, and the general welfare. Congress is made the guardian of this treasure; and to make their responsibility complete and perfect, a regular account of the receipts and expenditures is required to be published, that the people may know, what money is expended, for what purposes and for what authority.”
95. It may be recalled that Dáil Éireann is described by Article 15.1.2 as a House of Representatives of the people. Budgetary allocation and the raising of taxation are, therefore, not only integral features of the operation of the democratic nature of the State prescribed by Article 5, but represent key features of the representative duty of each Dáil Deputy. It is by these decisions that the Dáil (and the wider Oireachtas) shape the very society in which we live. It is for this reason that the individual members of the Dáil are directly answerable to the People in the electoral process provided for in Article 16.
96. Budgetary allocation is, therefore, a fundamental responsibility which Articles 5, 11, 17 and 28 of the Constitution cast upon the Dáil and its individual members. This constitutional responsibility may under no circumstances be abrogated, whether by statute, parliamentary practice or otherwise. It must be stressed in this regard that Article 28.4.1 requires that the Government “shall be responsible to Dáil Éireann”.
97. In this jurisdiction Article 15.2.1 of the Constitution provides for a further safeguard for this budgetary process. While Article 15.2.1 applies generally to all legislation (and thus not just to legislation dealing with appropriations and budgetary matters), it also applies to budget measures such as the annual Appropriation Act. Article 15.2.1 vests the exclusive legislative powers in the Oireachtas and inasmuch as any appropriation for the purposes of Article 11 has to be “by law”, such a law must conform to the requirements of Article 15.2.1. These requirements have been ventilated at length in a series of cases of which decisions such as City View Press Ltd. v. AnCo  I.R. 381, McDaid v. Sheehy  1 I.R. 1, Laurentiu v. Minister for Justice  4 I.R. 26 and McGowan v. Labour Court  IESC 21 are only the most prominent.
98. The test was articulated thus by O’Higgins C.J. in Cityview Press ( I.R. 381, 399):
99. This passage has been so frequently cited and judicially approved in subsequent case-law that it has acquired almost canonical status in this sphere of constitutional law. The test which it articulates is not, however, some technical artifice which has been imposed by an inflexible and formalistically minded judiciary. The Cityview Press test is rather instead a key element of the separation of powers and the rule of law by ensuring that the legislative branch retains proper control of executive discretion by providing for the clear articulation of proper legislative standards in each Act of the Oireachtas conferring such authority. The Cityview Press doctrine accordingly gives a further protection against the dangers of arbitrary appropriation, unfettered budgetary allocations and overweening executive influence in matters of budgetary appropriation of which Story had famously warned.
“In the view of this Court, the test is whether that which is challenged as an unauthorised delegation of parliamentary power is more than a mere giving effect to principles and policies which are contained in the statute itself. If it be, then it is not authorised; for such would constitute a purported exercise of legislative power by an authority which is not permitted to do so under the Constitution. On the other hand, if it be within the permitted limits - if the law is laid down in the statute and details only are filled in or completed by the designated Minister or subordinate body - there is no unauthorised delegation of legislative power.”
100. Here an analysis of both Cityview Press and McGowan is instructive. In Cityview Press the plaintiff challenged s. 21 of the Industrial Training Act 1967, which empowered the defendant, An Chomhairle Oiliúna, to make a levy order fixing the amount of the levy to be collected from each enterprise in a specified industry and used for training recruits to that industry. In the case of the printing industry the relevant order specified a levy of one per cent of total emoluments on all employees less £20,000. The plaintiff’s argument was that the Act did not provide the defendant body with any precise guidelines as to the basis on which the levy should be made, i.e. whether by reference to turnover, total salaries and wages or profits, or some other basis. This argument was rejected both in the High Court and Supreme Court by reference to the principles and policies test just articulated.
101. More recently in McGowan O’Donnell J. provided an account of why the section at issue in City View Press survived constitutional scrutiny:
102. In McGowan O’Donnell J. contrasted the powers conferred by the 1967 Act with the vastly more far-reaching powers provided for by the Industrial Relations Act 1946 in the case of registered employment agreements. Once these agreements were reached between representatives of employers and employees, they were registered with the Labour Court and became binding on an industry-wide basis. The agreements covered a range of areas in the field of employment law and practice and it was the very breadth of the delegation which caused the Supreme Court to hold that there had been a clear breach of Article 15.2.1. As O’Donnell J. explained:
“In the Cityview Press case, the delegation or authorisation under s. 21 of the Industrial Training Act 1967 may be said by some to be vague, but a number of important features were identified, particularly in contrast to the position which applies under the Industrial Relations Act 1964. The area of authorisation was narrow. It was the power to fix the amount of the levy, the Oireachtas having already made the decision that An Chomhairle Oiliúna was to be funded by a levy on the relevant designated industrial activity. The body which was authorised to fix the levy was itself a public law body exercising powers constrained by statute. Accordingly any order made would be subject to consultation with the relevant industrial training committee (s.21(3)), review and approval by the Minister (s.21(4)) and laid before each house of the Oireachtas, either of which was entitled to annul it within 21 days (s.21(6)). Furthermore, as McMahon J. in the High Court observed:
“There can be no doubt that s. 21 is so expressed as to as to confine the use of any money raised by a levy ordered to meeting any expense of AnCo in relation to the performance of its functions under the Act in respect of the designated industrial activity in respect of which the levy order was made”.
For that reason, and indeed for more general reasons of public law, there could be no question of the money raised being used for any other activity or for example, as a form of taxation or covert revenue raising. The area of decision making accorded therefore to An Chomhairle Oiliúna under s.21 was limited in a number of respects. Its power to fix the quantum of the levy was restricted by the object for which the levy was to be fixed. It retained a discretion as to the precise manner in which the levy should be raised as indeed was argued, whether by reference to turnover, profits, or otherwise. But given the broader constraints just identified, that is a very limited power and furthermore raises no obvious issues of policy…. For present purposes however, it is only necessary to identify the significantly limited scope of authorisation that was in issue in that case.”
103. While we will shortly return to consider and apply the Cityview Press doctrine in the context of the present case, one further critical issue needs to be addressed before we can properly do so. At the heart of the plaintiff’s arguments on this point is the contention that the concept of appropriation in Article 11 presupposes that neither the Dáil may vote supply nor the Oireachtas pass a law appropriating public monies unless the sums to be so disbursed are pre-determined in advance. In essence, therefore, her principal argument so far as the constitutionality of s. 6 of the 2008 Act is concerned is that it permits the disbursement of sums with no defined (or any) upper limit by the executive by way of financial support to credit institutions. Put another way, the plaintiff maintains that it was wholly destructive of the budgetary process with its in-built checks and balances for the Oireachtas to permit the Minister for Finance to disburse vast sums without a specific and separate vote in respect of those sums in the either the Dáil or, as the case may be, the Oireachtas. She contends that inasmuch as s. 6 of the 2008 Act allows this to be done, it is unconstitutional to that extent.
“The contrast with the scope of power afforded under the 1946 Act is instructive. If the 1946 Act conformed to the same pattern as that established in the 1967 Industrial Training Act, then the relevant terms would be set by the Labour Court perhaps after consultation with other public bodies and subject to ministerial approval and Oireachtas review. Even if such a structure were in place the breadth of the power afforded would still be telling. An REA can make provision not merely for remuneration, as was the case in Burke, but can make provision for any matter which may be regulated by a contract of employment. Thus, it can determine wages, pensions, pension contributions, hours of work, health insurance, grievance procedures, discipline procedures, staffing levels, production procedures, approved machinery or equipment, and anything else in the employment relationship. It is in the words of Henchy J. in Burke, a delegation of a “most fundamental and far-reaching kind”. It involves a fundamental part of the person’s life (if an employee), and their business (if an employer).
The extent of the delegation is also of significance. What is unusual and possibly unique is that the law making power granted under the 1946 Act is granted over a broad area of human activity to private persons, themselves unidentified and unidentifiable at the time of the passage of the legislation. When an employer such as the third named appellant is the subject of prosecution for breach of a registered employment agreement, that amounts to a clear allegation that a part of the law of the State has been breached. In such a case the particular provision which it is alleged has been breached has been made by the private parties to the employment agreement which has been registered by the Labour Court. The Labour Court itself has no power of consultation or even (as is the case of an ERO made under Part IV of the 1946 Act) a power to comment and return the proposed order to the joint industrial council. Therefore, it is clear that this specific provision is being made, not by a subordinate public body governed by public law, but by participants in the industry who were empowered to make regulations for themselves and for all others within that industry who may be competitors and whose interests may not be aligned with the makers of the REA. This is not a grant of a power to make regulations over a limited area subject to explicit or implicit guidance and review. It is an unlimited grant of power in relation to employment terms, made to bodies unidentifiable at the time of the passage of the legislation and without intermediate review. On its surface therefore, this appears to be a fatal breach of Article 15.2.1. “Law” is undoubtedly being made for the State, and by persons other than the Oireachtas. No direct statutory guidance is given for the exercise of the power. On its face, the Act does not define who might be parties to the agreement, or impose any limitation on the content of such agreement other than that it should relate to the conditions of employment. Such a far-reaching conferral of law making authority, can only be valid if it can be brought within the test outlined in Cityview Press. In the context of this case that can only be achieved if the process of registration by the Labour Court (which is essential to give statutory effect to an employment agreement) introduces sufficient limitation on the regulation making power granted by the statute to render that regulation no more than the filling in of gaps in a scheme established by the parent statute.”
104. Pausing at this point, our principal task so far as these constitutional questions are concerned is to ask whether the Oireachtas has vested the Government (or, as the case may be, the Minister for Finance) with the de facto power to appropriate budgetary sums in a manner which by-passes the appropriate constitutional safeguards and allows for the discretionary disbursement of budgetary allocations by the Minister uncontrolled by the appropriate principles and policies set out in the legislation . While these questions necessarily overlap, it may be convenient to consider them separately by reference first to the Cityview Press doctrine and then by reference to the proper construction of Article 11, Article 17 and Article 28.
Is the Cityview Press principles and policies test satisfied?
105. In examining the application of the Cityview Press principles in this context, it is helpful to examine the judgment of Blayney J. in McDaid v. Sheehy. This case involved a challenge to the constitutionality of the tax-raising procedure which had been provided for in s. 1 of the Imposition of Duties Act 1957. Section 1 allowed the Government to make orders amending the rates of customs or excise duty so that it could determine which goods were to be subject to a duty and, if so, the amount of such a duty. Section 2 then provided that such orders would have “statutory effect” for a maximum of two years after which they would need to be confirmed by the Oireachtas.
106. It is perhaps not surprising that in these circumstances s. 1 of the 1957 Act was held to be unconstitutional by Blayney J. ( 1 I.R. 1, 9) as violating the Cityview Press principles. On this point Blayney J. said:
107. The State’s appeal from this decision was allowed by the Supreme Court on the ground that as the order in question had been subsequently confirmed by Act of the Oireachtas, the applicant was not prejudiced by the operation of the provision and had no locus standi to challenge it. Although the Supreme Court accordingly did not pronounce on the constitutionality of the section so that the comments of Blayney J. must be considered to be obiter, we nevertheless think that this passage from his judgment is instructive and relevant for the present case, if only to contrast the virtually untrammelled latitude given by the 1957 Act with the much more narrow discretion vested in the Minister by s. 6 of the 2008 Act. This passage has also been approved in subsequent case-law: see, e.g., the comments of Geoghegan J. in Laurentiu v. Minister for Justice  4 I.R. 26, 39.
“When this test is applied to the provisions of the Act of 1957, giving the Government power to impose customs and excise duties, and to terminate and vary them in any manner whatsoever, I have no doubt that the only conclusion possible is that such provisions constitute an impermissible delegation of the legislative powers of the Oireachtas. The question to be answered is: Are the powers contained in these provisions more than a giving effect of principles and policies contained in the Act? In my opinion, they clearly are. There are no principles or policies contained in the Act. Section 1 states baldly that “the Government may by order” do a number of things, one of which is to impose a customs duty or an excise duty of such amount as they think proper on any particular description of goods imported into the State. In my opinion the power given to the Government here is a power to legislate. It is left to the Government to determine what imported goods are to have a customs or excise duty imposed on them and to determine the amount of such duty. And the Government is left totally free in exercising this power. It is far from a case of the government filling in only the details. The fundamental question in relation to the imposition of customs or excise duties on imported goods is first, on what goods should a duty be imposed, and secondly, what should be the amount of the duty? The decision on both these matters is left to the government. In my opinion it was a proper subject for legalisation and could not be delegated by the Oireachtas. I am satisfied accordingly that the provisions of the Act of 1957, which I have cited earlier, are invalid having regard to the provisions of the Constitution.”
108. While the comments of Blayney J. were directed at revenue-raising provisions - rather than, as here, spending provisions – McDaid nonetheless provides a good illustration of how a key element of budgetary control had been unconstitutionally ceded by the Dáil and the wider Oireachtas to the Government. Not only was the Government given a wide power to legislate by order in relation to customs and excise matters (and thus violating Article 15.2.1), but the central role of the Dáil in the raising of public money had also been by-passed through the operation of these executive powers.
109. While it is true that the 2008 Act conferred vastly more important and far-reaching powers on the Minister, we nonetheless think the discretion vested in him to give financial support to credit institutions is hemmed in by rigorous standards which may be contrasted with the very limited constraints contained in s. 1 of the 1957 Act which was at issue in McDaid. So far as the 2008 Act is concerned, the Minister must first have regard to the nature of the obligations which are likely to arise (s. 6(1)(b)) and the resources available to him (s. 6(1)(c)). Critically, the Minister may not exercise the powers conferred by s. 6 of the 2008 Act without having regard to “the matters set out in s.2.” Section 2 at once both defines the objects of the 2008 Act and further places definite and legally cognisable limits on the exercise of the Minister’s discretion.
110. Section 2 recites that the Minister has these powers because, having consulted with the Governor of the Central Bank and the Financial Regulator, he is of “the opinion” that:
111. These three conditions plainly govern and circumscribe the scope of the Minister’s discretion in a significant fashion. The effect of this is that the Minister can only give financial support where he is of opinion that there is (i) a serious threat to the stability of the banking sector; (ii) the giving of such support is necessary to maintain the stability of the State’s financial system and (iii) this is also necessary to restore equilibrium in the wider economy. By fixing the parameters of the Minister’s discretion, the section complies with the principles and policies test. It prescribes justiciable yardsticks against which the exercise of that discretion can, if necessary, be judicially evaluated. The guiding policy of the 2008 Act , therefore, was that the Minister was empowered to provide such financial support by way of the making of such capital contributions required at any given point in time to enable the relevant credit institutions to remain solvent and to comply the minimum capital and other regulatory requirements.
“….(a) there is a serious threat to the stability of credit institutions in the State generally, or would be such a threat if those functions were not performed,
(b) the performance of those functions is necessary, in the public interest, for maintaining the stability of the financial system in the State, and
(c) the performance of those functions is necessary to remedy a serious disturbance in the economy of the State.”
112. The reference to the fact that the Minister must form the “opinion” that the matters specified in s. 2 all apply is also of some importance. In The State (Lynch) v. Cooney  I.R. 337 the Supreme Court rejected the argument that the powers given to the Minister under s. 31 of the Broadcasting Act 1960 to prohibit a particular broadcast on the ground that it would promote crime or would tend to undermine the authority of the State vested the Minister with an absolute or unfettered discretion. As O’Higgins C.J. observed ( I.R. 337, 361):
113. This is re-inforced by the Supreme Court’s more recent decision in Mallak v. Minister for Justice, Equality and Law Reform  IESC 59,  1 I.L.R.M. 73 where these words of O’Higgins C.J. were not only again approved, but Fennelly J. added ( 1 I.L.R.M. 73, 87) that it was “axiomatic that the rule of law requires all decision-makers to act fairly and rationally, meaning that they must not make decisions without reasons.”
“The Court is satisfied that the sub-section does not exclude review by the Courts and that any opinion formed by the Minister must be one which is bona fide held and factually sustainable and not unreasonable. For these reasons the Court has come to the conclusion that the invalidity alleged to attach to s. 31(1) has not been established.”
114. If, therefore, the exercise of the discretion to grant support to a particular credit institution had been challenged, it would have been necessary to show that the Minister had formed the necessary opinion in good faith, that it was factually sustainable and, measured against the standards articulated in s. 2, that it was not unreasonable. No such challenge is bought in the present case. We mention these matters to demonstrate that the exercise of the Minister’s powers under the 2008 Act could have been judicially evaluated and reviewed in an appropriate case by reference to these very specific statutory standards.
115. Our task under this heading, therefore, is to assess whether the 2008 Act contains sufficient principles and policies in the manner required by Article 15.2.1 and thus to ensure that neither the Government nor the Minister has been given an uncontrolled and effectively unreviewable discretion in terms of the provision of financial assistance to the designated credit institutions. For the reason that we have just set out, we consider that the 2008 Act satisfies the principles and policies test and that it did not confer on the Minister an unfettered and unreviewable discretionary power with regard to the provision of financial assistance
Does the concept of appropriation in Article 11 imply that the appropriation must contain an upper limit?
116. If the 2008 Act satisfies the principles and policies test, then the further question arises as to whether it is necessary that any authorised spending must conform to some upper defined limit which is specified in advance. Some may think it unsettling that the 2008 Act permitted the Minister to commit such vast sums of public money without the necessity of a separate parliamentary vote which specified an upper limit in advance of such disbursements.
117. Yet we are not persuaded that the concept of appropriation in either Article 11 or Article 17 involves some pre-defined upper limit being prescribed by law prior to the authority to spend being given in the first place. Here it is significant that Article 17.2 merely requires that the purpose of the appropriation shall have been recommended to the Dáil by a message from the Government signed by the Taoiseach. If it had been intended that a law for the appropriation of public money should also be required to prescribe an upper figure, we feel certain that Article 17.2 would have expressly so provided.
118. The plaintiff’s counsel placed some emphasis on the use of the Irish language term “leithghabháil” as it appears in both Article 11 and Article 17. He suggested that as this compound word is made up of “leith” (side) and the verbal noun of “gabh” (to take), this implied a more definite control of disbursements than might be connoted by the English term “appropriate” in that it figuratively involved the gathering up and controlling that which had been scattered from the side. Yet “leithghabháil” is translated by Ó Dónaill, Foclóir Gaeilge-Béarla as “appropriation” and this is also the view of Ó Cearúil, Bunreacht ha hÉireann: A Study of the Irish Text (Dublin, 1999) at 293-294. Moreover, both the Irish and English words share the same semantic concepts of taking and setting aside. It seems to us, therefore, that insofar as there is any difference between the two terms “appropriation” and “leithghabháil” – which we do not frankly discern – it is at most a nuanced difference in emphasis which has no real bearing on the meaning of this word as used in either language version of either Article 11 or Article 17.
119. In assessing this question as a matter of first principle, it must also be recalled that it simply is not possible for either the Government or the Oireachtas to calculate precisely in advance how much a particular project or programme will cost. This is especially true in the case of demand led social programmes in areas such as health, education and social welfare. If the plaintiff’s arguments were correct then it would be constitutionally impossible for the Oireachtas to legislate for many social programmes without equally stipulating an advance upper limit on such spending in the law governing the programme in question.
120. If, for instance, legislation were to create an entitlement to free hospital or general practitioner care then on this argument it would follow that such legislation would also have to stipulate a maximum spending ceiling in order to remain within constitutional boundaries. What would then happen once the debt ceiling was approached? It may be presumed that in that hypothetical scenario the Oireachtas would then legislate to increase the statutory ceiling rather than create an unpalatable situation where those most in need of social spending might find that such was abruptly terminated by reason of the fact that a statutory debt ceiling had been reached. Faced with these recurrent difficulties, the temptation might well be for the Oireachtas to provide for absurdly high and rather meaningless debt ceilings when enacting legislation providing for such social spending.
121. The first solution (i.e., extending the debt ceiling once the threshold was about to be breached) might prove to be manifestly inconvenient, while the second (i.e., absurdly high debt ceilings) might well over time descend into some form of legislative charade. In fact, the plaintiff’s contention would not provide for any real and genuine form of budgetary control which was in addition to or superior to the controls expressly provided for in Articles 11, 17 and 28 when taken in conjunction with the principles and policies test in Article 15.2.1.
122. If, moreover, the plaintiff’s argument were to be accepted this might have the effect of either sapping the ability of the State to borrow money on international capital markets or, at least, introducing a new risk premium which would have to be reflected in more elevated bond yields in respect of Irish sovereign debt. The unchallenged evidence of Mr. Linehan, Mr. McMeel and Ms. Nolan was that the State must have the unconditional capacity to raise money as a first charge in order to be able to borrow on capital markets. That might well be put entirely at risk if a prior vote of the Dáil was required before such debt liabilities could be undertaken by the National Treasury Management Agency on behalf of the Minister for Finance.
123. Faced with this objection, it was the plaintiff’s argument that the Oireachtas had, in effect, already appropriated the sums due on the national debt by enacting legislation (s. 54 of the Finance Act 1970, as amended) which enables the Minister to raise money for the State by issuing debt securities. It was further argued that by approving the estimates and receipts, the Dáil had thus tacitly voted appropriation in respect of the issue of debt securities necessary to meet any anticipated deficit in the State’s budget. But as the various State witnesses observed in their evidence, it is not quite as simple as that. The Dáil might, for example, have no plans for a budget deficit in the coming financial year and indeed might have approved the estimates on that understanding. Yet an important source of revenue might suddenly evaporate in the course of that year in a way which was not foreseen or anticipated – such as, for example, occurred in the first part of 2008 with the collapse of stamp duty receipts - and in those circumstances it might be necessary for the NTMA to raise money on capital markets on behalf of the Minister.
124. As recent experience has all too painfully demonstrated, the welfare of the entire citizenry is hugely dependent on the capacity of the State to be able to raise money without hindrance on international markets. This is yet a further practical reason why the term “appropriation” in both Article 11 and Article 17 cannot be understood or read in the manner suggested by the plaintiff.
125. This has also been the experience of other jurisdictions as well. One of the great founding fathers of the US Constitution (and its first Treasury Secretary), Alexander Hamilton, defined the concept of appropriation in Article 1, section 9, clause 7 of the US Constitution as requiring that “no money can be expended, but for an object, to an extent, and out of a fund, which the laws have prescribed”: Hamilton, Works, Vol. 8 122, 128 (Cabot Lodge ed., 1904).
126. Applying that test to the present case, it can be said that the objects of the appropriation under the 2008 Act are clear and satisfy the requirements of Article 17.2. The law further designates that the payment comes from the Central Fund in the manner envisaged by Article 11. The extent of the payments are also clear. While, of course, the Oireachtas did not know precisely the sums which were at stake when enacting the 2008 Act, it laid down principles and policies in s. 2 and s. 6 which, as we have already seen, circumscribe the extent of the Minister’s discretion. He could only provide such support as was necessary to safeguard the viability of the financial sector and, by extension, the wider economy. Even though the sums ultimately required were staggeringly large, it has not been suggested that the task of recapitalisation of the banks required a cent less.
127. Nor can it be said that Hamilton’s definition required that the appropriation legislation must necessarily stipulate a precise, pre-defined spending limit, since long-standing (and unchallenged) US practice suggests otherwise. In the words of Seith, “Congress’ Power of the Purse” (1988) 97 Yale L.J. 1343, 1379:
128. We repeat, therefore, that the objects and effects of the appropriation requirements in Article 11 and Article 17 when coupled with the principles and policies test in Article 15.2.1 is to preserve the budgetary autonomy of Dáil Éireann; to safeguard the proper operation of the budget process as required by the Constitution and to ensure that the discretion thereby vested by law in the Government and individual Ministers to spend public moneys can be controlled and measured by reference to identifiable standards prescribed by law.
“There exists permanent or indefinite appropriation for a wide range of government expenditures….For instance, payment of interest on the national debt has been permanently and indefinitely appropriated since 1847; statutory entitlement programs are generally funded by permanent appropriations of trust fund or general Treasury receipts; various contract obligations (for instance, for housing subsidies) are also paid by permanent, indefinite appropriations.”
129. Measured by these standards we hold that s. 6 of the 2008 Act satisfies these tests. Specifically, as we have already observed, the 2008 Act does indeed contain clear and identifiable standards by reference to which the Minister’s powers can be objectively judged and evaluated. Nor do we accept the plaintiff’s central argument that the concept of “appropriation” in either Article 11 or Article 17 requires that a pre-defined upper limit in the amount of public moneys that can be allocated for a particular purpose must be prescribed by law in advance.
130. It is for these reasons that we dismiss the challenge to the constitutionality of s. 6 of the 2008 Act. We find that s. 6 gave the Minister power to issue financial support to the banks under certain defined circumstances without the necessity for any further parliamentary vote and that it is not inconsistent with the Constitution.
131. The defendants originally included a defence grounded upon alleged delay. It was unclear to the Court by reason of the stance taken on locus standi whether they were persisting in this defence. By reason of the conclusions reached above it is unnecessary in any event to consider the issue.
132. Although the plaintiff’s locus standi to raise issues concerning the vires and constitutionality of the manner in which the promissory notes were issued prior to her election to Dáil Éireann in February 2011 was originally put at issue by the defendants, this objection was subsequently withdrawn. Counsel for the defendants submitted that it was important and desirable in the public interest that the substantive issues raised in this action be judicially resolved. In these circumstances, the Court proceeded on the basis that the plaintiff had standing to challenge the giving of financial support pursuant to s.6 of the 2008 Act prior to her election.
Part IX – Summary and Conclusions
133. The fact that the Anglo/IBRC promissory note was returned to the Minister for Finance following the liquidation of the IBRC in February 2013 and cancelled in consideration of bonds issued by the Minister pursuant to s.17(1) of the Irish Bank Resolution Corporation Act 2013 did not have the effect of rendering the plaintiff’s challenge to the issue of the note moot. This is because the Minister’s entitlement to issue bonds pursuant to s.17(1) of the 2013 Act was dependant, inter alia, on whether the Anglo note was lawfully issued in the first place.
134. The EBS and Anglo notes when issued in June and December 2010 respectively were not ultra vires the temporal restrictions then in place pursuant to s.6(3) of the Act of 2008 (as amended ) and the Credit Institutions (Financial Support)(Financial Support Date) Order 2010 (SI No. 471 of 2010) even though the notes contemplated payments by the Minister beyond the then specified cut-off date of 31st December, 2015. Those provisions prohibit the continuation of financial support after the specified date. However s.6(3) as amended did not prohibit the Minister either in June 2010 or December 2010 from providing financial support on those dates by a promissory note which had the potential to continue in being or provided for payments to be made after the then specified date of 31st December 2015.
135. That specified date has been later extended from time to time and the Credit Institutions (Financial Support)(Financial Support Date)(No.2) Order 2012 (S.I. No. 520 of 2012), now specifies 30th June, 2018. The Anglo note was returned and cancelled in February 2013 and no further temporal issue now arises.
136. The situation in the case of the EBS note is somewhat different, since the payments to be made by the Minister for Finance under that note are likely to continue past the present deadline of 30th June, 2018. Section 6(3)(as amended) does not permit the continuation of financial support after the cut-off date or such later cut-off date as might be prescribed by ministerial order. Hence the EBS note which continues to subsist cannot be left in place or payments made thereunder after 30th June, 2018 unless the end date is further extended by ministerial order pursuant to s.6(3)(b) of the 2008 Act.
137. Section 6(1)(c) of the 2008 Act (which provides that in giving financial support to credit institutions the Minister shall have regard to “the resources available to him or her for that purpose”) does not require that the Dáil would first appropriate monies for this purpose by means of a separate vote prior to the Minister giving such financial support. Any conclusion to the contrary would ignore the plain meaning and effect of s. 6(12) which by providing that the financial support “shall be paid out of the Central Fund or the growing produce thereof” stipulates that these payments are permanent charges on the Central Fund. Section 6(12) is an authorisation to pay from the Central Fund without the necessity of a further Dáil vote.
138. The Court found as a fact that the Minister was indebted to the Central Bank in respect of the Anglo/ IBRC promissory notes at the date of liquidation of IBRC. It follows that the Minister accordingly had an obligation or liability to the Central Bank within the meaning of s.17(1) of the 2013 Act on the liquidation of IBRC and was authorised to issue bonds in accordance with s. 17 of the 2013 Act.
139. Articles 11, 15, 17, 21, 22 and 28 of the Constitution envisage that the preparation of the estimates and receipts, budgetary allocations, the raising of taxation and the appropriation of public money involves the participation of the Government, the Dáil and, in the case of the enactment of legislation, the wider Oireachtas. These tasks are not only integral features of the operation of the democratic nature of the State prescribed by Article 5, but, so far as the Dáil is concerned, represent a key feature of the representative duty of each Dáil Deputy.
140. A further safeguard is provided by Article 15.2.1 of the Constitution, namely, that any legislation delegating discretionary powers (including in relation to the spending of public money) must contain sufficient principles and policies in order to satisfy the requirements of Article 15.2.1.
141. Section 6 of the 2008 Act satisfies the principle and policies test and accordingly does not violate Article 15.2.1. The section does not invest the Minister with an uncontrolled discretion. Rather the exercise of the powers is limited by three specific criteria laid down in s. 2 of the 2008 Act. Any alleged failure to comply with the criteria in s. 2 is reviewable by this Court. No such challenge to the exercise of these powers by the Minister was made in these proceedings
142. The concept of appropriation in Article 11 does not require a pre-determined upper limit prescribed by the appropriating law. Here it is significant that Article 17.2 merely requires that the purpose of the appropriation shall have been recommended to the Dáil by a message from the Government signed by the Taoiseach. If it had been intended that a law for the appropriation of public money should also be required to prescribe an upper figure, we feel certain that Article 17.2 would have expressly so provided.
143. The Court accepts as the definition of appropriation for the purposes of Article 11 that proposed by Alexander Hamilton in respect of the parallel provisions of the US Constitution, namely that the appropriation must be for “an object, to an extent, and out of a fund, which the laws have prescribed.” Applying that test to the present case, it can be said that the objects of the appropriation under the 2008 Act are clear and satisfy the requirements of Article 17.2. Section 6(12) of the 2008 Act further provides that the payment comes from the Central Fund in the manner envisaged by Article 11.The extent of the payments are also clear. While, of course, the Oireachtas did not know precisely the sums which were at stake when enacting the 2008 Act, it laid down principles and policies in s. 2 and s. 6 of the 2008 Act which circumscribe the extent of the Minister’s discretion to provide financial support.
144. It is for these reasons that we reject both the challenge to the validity of the two promissory notes issued by the Minister for Finance in June and December, 2010 and the challenge to the constitutionality of s. 6 of the 2008 Act.
145. For all of the foregoing reasons the plaintiff’s claim must be dismissed.
1. The Plaintiff is a member of Dáil Éireann having been elected for the constituency of Dublin Central at the General Election held in February, 2011.
The Statement of Facts which was agreed between the parties
2. The Credit Institutions (Financial Support) Act, 2008 ("the Act") was enacted on the 2nd October, 2008.
3. Six schemes were made pursuant to s. 6(4) of the 2008 Act. The said schemes were approved by the Oireachtas and contained in the following Statutory Instruments:
4. The period beyond which financial support provided under s. 6 of the 2008 Act could be provided was extended pursuant to the following Orders made by the Minister under s. 6(3)(b) of the Credit Institutions (Financial Support) Act 2009 in relation to the financial support date:
• SI 411 of 2008
• SI 490 of 2009
• SI 470 of 2010
• SI 546 of 2010
• SI 634 of 2011
• S1 519 of 2012
5. In each case the relevant statutory instrument specifies a financial support date up to which financial support may be provided under section 6. This is the latest date permitted for the provision of the financial support.
• SI 488 of 2009 - to 29th September, 2015
• SI 471 of 2010 - to 31st December, 2015
• SI 548 of 2010 - to 30th June, 2016
• SI 256 of 2011 - to 31st December, 2016
• SI 636 of 2011 -to 30th June, 2017
• SI 225 of 2012 - to 31st December, 2017
• SI 520 of 2012 - to 30th June, 2018
6. The issuance period during which credit institutions may incur borrowings, liabilities and obligations in respect of which financial support may be provided under section 6 was extended pursuant to the following orders made by the Minister pursuant to s. 6(3B) of the 2009 Act:
7. On the 15th January, 2009, the Government announced it would take steps that would enable Anglo Irish Bank to be taken into State ownership. The Anglo Irish Bank Corporation Act, 2009 provided for the transfer of all the shares of Anglo Irish Bank to the Minister for Finance and was enacted under Irish law on the 21st January, 2009. On the same date, the bank was re-registered as a private limited company.
• SI 489 of 2009 - the period 9th December, 2009 to 29th September, 2010
• SI 472 of 2010 -the period 30th September, 2010 to 31st December, 2010
• SI 547 of 2010 - the period 1st January, 2011 to 30th June, 2011
• SI 257 of 2011 -the period 1st July, 2011 to 31st December, 2011
• SI 635 of 2011 - the period 1st January, 2012 to 30th June, 2012
8. During the course of 2009 and 2010 a total of €4.1 billion was provided to the Irish Bank Resolution Corporation (IBRC) in the form of ordinary equity and special investment shares (the consideration for which was cash) and a total of €30.6 billion in the form of capital contributions (the consideration for which was promissory notes provided by the State). The promissory notes were pledged by IBRC as collateral for Emergency Liquidity Assistance funding provided to IBRC under a Special Master Repurchase Agreement with the Central Bank of Ireland.
9. The total capital provided to IBRC was €34.7 billion.
10. This capital was provided by the Minister for Finance to IBRC (formerly Anglo Irish Bank Corporation plc and Irish Nationwide Building Society) in 2009 and 2010.
11. The instalments due to IBRC under the promissory notes were to be paid over a period from March, 2011 to March, 2031.
12. Capital was provided to the Educational Building Society (EBS) by way of €625 million in the form of special investment shares and €250 million by way of a promissory note.
13. IBRC and EBS [and other Irish banks] sought to access Emergency Liquidity Assistance (ELA) from the Central Bank of Ireland which was guaranteed by the Minister for Finance. Such a guarantee was given pursuant to the Credit Institutions (Financial Support) Act, 2008 and was extended.
14. The capital provided was shown in the General Government Balance in 2009 and 2010, with the result that the deficit was estimated to be in the region of 14% of GDP for 2009 and 32% of GDP for 2010. Eurostat rules required the full amount of capital provided in the form of promissory notes to be recorded in 2010, although no payment in respect of the promissory notes was made until March, 2011.
15. The full amount of the capital provided in the form of promissory notes was added to the level of General Government Debt in 2010.
16. The interest rate charged in the promissory notes was referenced to Irish Government Bond yields at the date that each tranche of promissory notes was issued. An interest holiday was included in the terms of each of the IBRC promissory notes. which meant that between 1st January, 2011 and 31st December, 2012, no interest was charged on the promissory notes.
17. Payments on the IBRC promissory notes were to be made over a period to 2031, with equal instalments of €3.06 billion per annum being paid from the 31st March, 2011, and with the amounts to be paid decreasing from the 31st March, 2024.
18. The 31st March, 2011, IBRC promissory notes payment was by way of cash payment. The IBRC promissory notes payment that was due on the 31st March, 2012, was settled by the delivery of a long term Irish Government Bond to IBRC.
19. The 31st March, 2011, IBRC promissory notes payment was made from the Central Fund and was subject to the grant of credit by the Comptroller and Auditor General for it.
20. A higher interest rate was to be chargeable on the IBRC promissory notes from the 1st January, 2013, to reflect the fact that an interest holiday was taken for the full calendar years 2011 and 2012.
21. A number of Statutory Instruments have been made pursuant to Section 6(3) of the Credit Institutions (Financial Support) Act, 2008, which allows for the extension of the period of financial support beyond the 29th September, 2010, by Ministerial Order. Statutory Instrument SI 520 of 2012 extends the date for the provision of financial support to the 20th June, 2018. Furthermore, pursuant to s. 6(3A) of the Act as amended, the first named defendant may specify a later end date for the provision of financial support in accordance with the requirements of that Section. Section 6(3B) as amended provides that the "Minister may specify by order a period or periods during which credit institutions may incur borrowings, liabilities and obligations in respect of which financial support may be provided" under section 6.
22. In the Estimates of the Receipts and Expenditure, also known as the White Paper, payment of the promissory notes for the financial years 2011, 2012 and 2013 was set out under Non-Voted Capital Expenditure.
23. Before the beginning of each financial year, the Government presents to the Dáil, on or before Budget Day, in accordance with Article 28.4.4 of the Constitution, the White Paper on Receipts and Expenditure setting out the forecast outturn for the current financial year and, in relation to the new financial year, estimated receipts from taxation at pre-budget rates, estimated Exchequer expenditure on a pre-budget basis (both voted and non-voted) and the estimated Exchequer borrowing requirement. An element of the White Paper is that non-voted expenditure on a pre-budget basis is laid out in detail. A pre-budget basis means that the estimates in the White Paper do not take into account the expenditure and taxation measures announced in the Budget. The pre-budget estimates in the White Paper are based on the status quo ("no policy change basis") prior to any Budget announcements or decisions being made. On Budget Day, the material in the White Paper is supplemented with updated macroeconomic and budgetary forecasts, updated receipts and expenditures, and details of proposed measures to be introduced. Non-voted expenditure in the White Paper is presented with a breakdown of non-voted current expenditure and non-voted capital expenditure, and details of the various components for both expenditures.
24. The White Paper is prepared in advance of the Budget. A central element of the Budget is the Financial Statement of the Minister for Finance, in which the Minister sets out on behalf of the Government its overall budgetary policy for the year ahead and the proposed changes to taxation and expenditure. The overall total expenditure figure is laid out in the Budget and the Minister for Finance's Statement, and takes account of changes introduced in the Budget/Estimates process. The Expenditure report lays out details of voted expenditure, but the Budget shows overall expenditure figures. Non-voted expenditure is not affected by Budget changes, and as such, the detailed figures of the composition of non-voted expenditure would remain the same as in the White Paper. Since 2011, the Expenditure Estimates, which form part of the overall Budget, have been presented to the Dáil separately by the Minister for Public Expenditure and Reform.
25. The Financial Statement of the Minister for Finance sets out the overall quantum of voted and non-voted expenditure for the forthcoming financial year. When total expenditure is expected to exceed total receipts, the Budget sets out how much the Government proposes to borrow.
26. Proposed taxation measures, which are intended to have immediate effect, are contained in financial resolutions. These resolutions are debated and voted on in the Dáil on Budget Day. The Budget is also debated in the Seanad on Budget Day although, in keeping with the primacy of the Dáil in financial matters and the Money Bill status of the Finance Bill, the imposition of taxation measures by financial resolution does not involve a vote in the Seanad.
27. Following the end of the year, the Department of Finance prepares detailed accounts ("the Finance Accounts") showing all receipts into and issues from the Exchequer for the year in question together with details of the national debt, which are based on data supplied by the NTMA. The Revenue Commissioners prepare Revenue Accounts and each Department or Office with a Vote in the Appropriation Act is required - under s. 22 of the Exchequer and Audit Departments Acts, 1866, as amended by the Comptroller and Auditor General (Amendment) Act, 1993 - to prepare an account in respect of its Voted Expenditure, known as the Appropriation Account, in respect of each Supply Grant administered by it for submission to the Comptroller and Auditor General. The statutory requirement is for the Appropriation Account to provide details of outturn (i.e. actual payments made and receipts brought to account) against the Estimate provision. This Account must be signed by the Accounting Officer, usually the Secretary General or Head of the Department or Office in question.
28. The Appropriation Accounts are then examined by the Comptroller and Auditor General who audits and certifies them and reports on them to the Dáil. All reports of the Comptroller and Auditor General are laid before Dáil Éireann. The Committee of Public Accounts ("PAC") considers such reports on behalf of Dáil Éireann and reports its findings to Dáil Éireann. A formal reply to every Report of the PAC is prepared by the Department of Public Expenditure and Reform in consultation with the Department(s) and Office(s) concerned and is called "The Minute of the Minister for Public Expenditure and Reform on the Report of the Committee of Public Accounts". The PAC may consider Minutes in public session and if not satisfied with the response to a recommendation, may pursue the matter further with the Minister. The PAC may also seek a Dáil debate on the matter and may raise the matter with the relevant Accounting Officer in writing or on the next occasion when he or she is before the PAC.
29. Government spending is divided into two broad categories according to the authority for making it - Voted Expenditure and Non-Voted Expenditure. Voted Expenditure is the money used to fund the ordinary services, both capital and non-capital, provided by Government Departments and certain Offices (e.g. the Office of the Attorney General) and Agencies (such as the Courts Services or the HSE). The funds are provided for under "Votes", one or more covering the functions of each Department or Office. A "Vote" is an amount of money allocated directly by the Dáil to a Government Department or Office to carry out its services for the year. The Annual Budget also includes expenditure which is not voted annually by the Dáil. This is called Non-Voted Expenditure and it is paid out of the Central Fund on the authority of various Statutes enacted by the Oireachtas, rather than through the Annual Estimates Procedure.
30. Non-Voted Expenditure has a long provenance and has been part of the system since before the foundation of the State.
31. Non-Voted Expenditure is reported on and accounted for in the Annual Finance Accounts, as are issues for voted spending. The Finance Accounts are an account of payments into and out of the Central Fund. This includes the issue of payments for Non-Voted Spending, including the sinking fund, servicing the National Debt, the Capital Services Redemption Account, payments to the holders and former holders of political and constitutional offices, payment to the EU budget together with various payments relating to the State's international obligations and payments in relation to elections and referendums. It also covers Non-Voted Capital Expenditure.
32. Non-Voted Expenditure divides into two broad categories - Central Fund charges and other Central Fund issues. Central Fund charges are permanent charges on the State revenues paid under the continuing authority of specific Statutes. They include the servicing of the National Debt and the salaries, pensions and allowances of constitutional office-holders and former constitutional officeholders such as the President, the Judiciary and the Comptroller and Auditor General. Other Central Fund issues are not constant regular payments. Such issues are repayable advances to such State bodies in respect of investment in projects making up part of the Public Capital Programme. Payments made to the banks in recent years have been included in this category of expenditure.
33. Authority for Non-Voted Expenditure (whether they are Central Fund charges or issues) may provide for the payment of a fixed amount annually or it may enable payment up to a certain limit or it may not specify any limit at all (as in the case of the National Debt service costs or pensions). The statutory authority for the Central Fund issues usually provides that public money may be made available by the Minister from the Central Fund or the growing produce thereof.
34. When public expenditure has been approved by the Oireachtas, whether through the estimates process for "voted expenditure" or through specific legislation for "non-voted expenditure", the authorisation of the disbursement of this money remains subject to controls. This spending is subject to the sanction of the Minister for Finance (and since 2011 the Minister for Public Expenditure and Reform) under the Exchequer and Auditor Department Act, 1921 and the Ministers and Secretaries Act, 1924 (as amended). It is also subject to the approval of the Comptroller and Auditor General pursuant to Article 33.1 of the Constitution and the Comptroller and Auditor General (Amendment) Act, 1993.
35. It is the Comptroller and Auditor General's function (as Comptroller) to control on behalf of the State all disbursements of monies and to audit all accounts of monies administered by or under the authority of the State. He must ensure that no money is issued from the Exchequer by the Minister for Finance except for purposes approved by the Oireachtas.
36. Before any money can issue from the Exchequer, the Minister for Finance (or a senior official duly authorised by the Minister) must first make a written requisition to the Comptroller and Auditor General for an issue of credit on the Exchequer account for a stated sum. If the Comptroller and Auditor General is satisfied that the requisition is correct and the amount is properly issuable, he then informs the Central Bank and the credit in question is granted. Only then can the issue from the Exchequer be made.
37. The Comptroller and Auditor General will not issue a credit in respect of Non Voted Expenditure unless satisfied that the Oireachtas has given statutory authorisation for the relevant charge on the Central Fund. A payment from the Central Fund can only be made if there is a legislative provision authorising payment and the Comptroller and Auditor General gives the necessary credit.
38. Bills providing for Central Fund services are accompanied by a "money message", i.e. a prior recommendation from the Government signed by An Taoiseach, as required by Article 17.2 of the Constitution.
39. The Department of Finance (and since 2011 the Department of Public Expenditure and Reform) arrange for money messages, pursuant to requests from the Bills Office of the Houses of the Oireachtas, in respect of any Bills which involve appropriation by way of Voted or Non-Voted Expenditure, irrespective of which Department is sponsoring the Bill. The wordings of the money message differ, depending on the type of message in question-- Voted or Non-Voted.
40. On the 30th September 2008 the Money Message for the Credit Institutions (Financial Support) Bill, 2008 was signed by An Taoiseach Brian Cowen and submitted to Dáil Éireann and the Bill was passed through the Dáil and Seanad and signed into law by the President on the 2nd October 2008.
41. The legislation was passed by the Oireachtas to deal with an unprecedented banking crisis which threatened to collapse the Irish banking sector and the economy. The Minister for Finance has, in accordance with the provisions of s. 6(15) of the Act, provided the Houses of the Oireachtas with annual reports informing the members of each House on the situation with regard to the financial support provided under s. 6.
42. Since any monies to be paid out under s. 6 are to be paid out of the Central Fund, they require the sanction and approval of the Comptroller and Auditor General.
43. For the purposes of paying the sums due on the promissory notes on the 31st March, 2011, in the sum of €3.06 billion, the Minister for Finance was required to and did raise a requisition for credit on the account of the Exchequer requesting that the Comptroller and Auditor General grant the Minister credit to provide for those payments. Similarly, payments in respect of the EBS Promissory Note require the preparation of a requisition for credit to the Comptroller and Auditor General and this has been done on each occasion where payment has been made.
44. The necessary credit was then granted to the Minister by the Comptroller and Auditor General.
45. In proceedings entitled Hall v. Minister for Finance & Ors Record No. 2012/3230P, raising several of the issues which arise in these proceedings, the plaintiff made representations to the effect that she supported the position of the plaintiff through her solicitor on Friday 25th January, 2013, during the course of which her solicitor indicated that she had been aware of the proceedings for some time. The President delivered judgment in the Hall case on 31st January, 2013, and the plaintiff therein indicated his intention to appeal that decision to the Supreme Court. Subsequently, on 15th February, 2013, the plaintiff herein sought to join the appeal in the Hall case (Appeal No. 32 of 2013) as a co-plaintiff which application was rejected by the Supreme Court by order made on 20th of February, 2013, with judgment delivered also on that date.
46. The IBRC Act 2013 was enacted on 7th of February, 2013. Before enactment, a money message, signed by An Taoiseach, was provided to the Bills Office under Article 17.2 of the Constitution.
47. On the 7th February, 2013, the previous funding arrangement with regard to the Promissory Notes between IBRC and the Central Bank of Ireland (CBI) was unwound and the CBI became the economic owner of the Promissory Notes which were then exchanged for Government bonds.
48. The Government Bonds in question comprise:
49. The bonds will pay interest every six months (June and December) based. on the 6-month Euribor interest rate plus an interest margin which averages 2.63% across the eight issues.
• 3 tranches of €2bn each maturing after 25, 28 and 30 years
• 3 tranches of €3bn each maturing after 32, 34 and 36 years
• 2 tranches of €5bn each maturing after 38 and 40 years.
50. The said bonds were created and issued by the Minister for Finance pursuant to the provision of s.17 of the IBRC Act 2013.
51. Article 11 of the Constitution provides that "[a]ll revenues of the State, from whatever source arising, shall, subject to such exception as may be provided by law, form one fund which shall be appropriated for the purposes and in the manner and subject to the charges and liabilities determined and imposed by law ". The Oireachtas is thus expressly empowered to enact laws (as distinct from the passing by Dáil Éireann of resolutions) providing for both the appropriation and the making subject to charges and liabilities of the Central Fund and to provide the manner for so doing.
52. The Constitution at Article 17.2 expressly distinguishes between "vote(s)" and "resolution(s)" for the "appropriation of revenue or other- public moneys", on the one hand, and "law(s)... enacted for the appropriation of revenue or other public moneys"; on the other hand, and provides that "Dáil Éireann shall not pass" any such vote or resolution, and that "no [such] law shall be enacted" by the Oireachtas without a money message recommending that course from the Government signed by the Taoiseach in either case.
1.The bracketed words were added by the amendments made to s. 6(1) of the 2008 Act by the Second Schedule of the Financial Measures (Miscellaneous Provisions) Act 2009.