United Left TD Joan Collins has lost her High Court challenge to the issuing of €31 billion promissory notes in favour of Anglo Irish Bank and the Educational Building Society.
Because the case involved issues affecting the entire basis of the State’s finances, it was heard by a three-judge court comprising Mr Justice Peter Kelly, Ms Justice Mary Finlay Geoghegan and Mr Justice Gerard Hogan.
The promissory notes were issued by the Minister in 2010 under the 2008 Credit Institutions Financial Support Act, enacted that year to provide for up to €440 billion public funds to financial institutions via the State’s “bank guarantee”.
Ms Collins argued the powers given to the minister for finance to create €31 billion in sovereign debt via promissory notes amounted to an unlawful “blank chequebook” to spend public money without limit, but the State argued the law had to be seen in the context of the financial crisis then engulfing Ireland.
Section 6 of the 2008 Act provided the minister may provide “financial support” to credit institutions. Ms Collins argued the power given to the minister under section 6 was unconstitutional in that it encroached on the exclusive power of the Dáil to appropriate public funds for expenditure.
The State denied section 6 allows the minister power to create public liabilities with no time or amount limits.
Upper limit
Passing judgment yesterday, Mr Justice Kelly said at the heart of Ms Collins's case was the question whether public money can be voted and appropriated, whether by means of a Dáil vote or a law passed by the Oireachtas, without an upper limit being specified by that vote or in legislation.
The judge noted the decisions made in 2008 and during the financial crisis were, and still are, “hugely controversial” but the court wished to emphasise that neither the enormity of those decisions nor their controversial character had any direct bearing on the legal and constitutional issues the court had to consider.
Having analysed the evidence and the law, he said the court had rejected Ms Collins’s challenge to the validity of the two notes and also dismissed her claim that the relevant law under which the notes were issued was unconstitutional.
'Uncontrolled discretion'
The disputed law did not give the minister for finance an "uncontrolled discretion" to spend public money, he said.
The exercise of powers was limited by specific criteria and any alleged failure to comply with those criteria could be reviewed by the courts.
The concept of “appropriation” of public money does not require a predetermined upper limit prescribed by the appropriating law, he added. Article 17 of the Constitution merely requires the purpose of the appropriation shall have been recommended to the Dáil by a message from the government signed by the taoiseach, as occurred in this case.
Appropriation must be for an object, to an extent and out of a fund, he said. In this case, the objects of the appropriation were clear and satisfied the requirements of the Constitution.
The extent of the payments are also clear, he said.
While the Oireachtas did not know precisely the sums which were at stake while it was enacting the 2008 Act, it laid down principles and policies in that Act which circumscribe the minister for finance’s discretion to provide financial support.
