A construction company and its two directors were "damned if they did and they were damned if they didn't" agree to provide incorrect invoices for work on the homes of Mr Michael Lowry and Mr Ben Dunne, Judge Thomas Fitzpatrick said in Naas District Court when he convicted them on nine counts of breaches of the Companies Acts.

Faxhill Homes Ltd and directors Mr Jack Tierney and Ms Jennifer Tierney of Newbridge, Co Kildare, were fined a total of £700 (€889) and ordered to pay £10,000 in costs after they pleaded guilty to a number of offences, including failure to keep proper books and records of transactions, lack of compliance in relation to keeping details of debenture holders, and failure to produce books and documents.

This was a test case brought by the Tanaiste and Minister for Enterprise, Trade and Employment, Ms Harney, on foot of a report by an authorised officer, Mr George Moloney. The prosecution alleged 26 breaches of company law.

The court had been told during earlier hearings that invoices connected with work on the houses of Mr Michael Lowry and Mr Ben Dunne had been filled out incorrectly, purporting that the work had been done on Dunnes Stores premises. Faxhill Homes built a £390,000 extension to Mr Lowry's house in Co Tipperary. It also carried out work totalling almost £1 million on the home of Mr Dunne in Dublin. Invoices for the work on both were sent to and paid for by Dunnes Stores.

The case was adjourned last March after 12 days' hearing and was due to resume yesterday morning before Judge Fitzpatrick. However, counsel for both Ms Harney and Faxhill privately asked the judge for time to discuss the case and spent around 90 minutes in those discussions before Mr and Ms Tierney and Faxhill decided to plead guilty to nine of the offences and offer £10,000 in costs to the prosecution. Last November, they had pleaded guilty to just three of the offences.

When the hearing resumed in the afternoon, Mr David Conlan Smyth said the prosecution accepted the pleas together with the £10,000 in costs and he asked the judge to strike out the remainder of the summonses.

Mr Colm Condon, for the defence, said this was the first case of its kind in the State. The evidence as given by the prosecution had one undeniable fact in it: that Faxhill Homes and Jack and Jennifer Tierney in no way benefited in relation to any of the matters that came before the court, other than that the company was paid for the work carried out. It was not overpaid or underpaid. There was a failure to comply and offences had been committed.

The judge said he could see how Mr Tierney and his company became entangled in this web of deceit or deception, which was woven for the purposes of tax evasion or what appeared to have been tax evasion by other parties.

"There is no suggestion at all or there has been no suggestion at all throughout the case that Mr Tierney or Faxhill were involved in any tax evasion and they did not gain financially from this service, apart from being paid for the work," he said.

He said it was made clear throughout the case that Faxhill was a reputable company; he would take this into consideration as well as the fact that they had pleaded guilty, albeit at a late stage in the case. He would also take into account the fact that there were no previous convictions and they had offered the quite substantial sum of £10,000 for legal costs.

Mr Tierney was fined a total of £250 and ordered to pay £10,000 costs for three breaches of the Companies Acts. In the case of Ms Tierney, who "doesn't appear to have taken any active part in the running of the company", the judge said he found the facts proven and applied the Probation Act. Faxhill Homes Ltd was fined a total of £450 for five offences.

Welcoming the judgment, the Tanaiste, Ms Harney, said the convictions vindicated her decision in July 1998 to undertake an examination of the books and documents of Faxhill Homes Ltd.