(1987)1987 June 26 [PIKIS, J ] INTHE MATTER OFARTICLE 146 OFTHE CONSTITUTION YORK INTERNATIONAL SECURITIES LTD, Applicants, ν THE REPUBLIC OF CYPRUS, THROUGH THE MINISTER OFCOMMERCE ANDINDUSTRY, Respondent (Case No 492/87) Acts or decisions m the sense ofArt 1461 of the Constitution — Companies — 77ie Companies Law, Cap 113, section 159(
- b)— Decision to appoint inspectors for investigating the affairs of acompany — Notjusticiableunder Art 1461 Companies — TheCompaniesLaw,Cap 113—Section 159(b)— Appointment of inspectors for investigatinga company's affairs — Objects ofaforesaid section 5 By meansof thisrecourse theapplicants,anoffshore company, challenge the decision of the Minister of Commerce, taken in pursuance to section 159(
- b)oftheCompaniesLaw, Cap 113,whereby inspectorswere appointed 10 toinvestigate theiraffairs Theapplicantshave,also,applied for a provisional order, suspending enforcement of the sub-judice decision, pending determination of the recourse Held,dismissingthe recourse
(1)Section 159(
- b)of Cap 113 forms partof a section of the CompaniesLaw designed toprovide for official inspectionof 15 the affairs of a company Notonly s 159(
- b)throws light on the purpose for which thepower todirectinspection is conferred, buts 163 of thesame law does likewise, laying down thatdepending on the outcome of inspection, a cnminal prosecution for fraudulent conduct may be instituted, as well as proceedings for thewinding upofthecompanyandanactionfordamages (as 2 0 provided insubsection 4)
(2)The foremost object of s 159(b) is toauthonze an official inspection of the affairs of a company wtth a view to determining whether its business is nonagedwith aviewtodefrauding thecreditorsorany otherperson orfor a uidulent or unlawful purpose Also inspection may be authorized wrth a 834 25 3C.L.R. 5 10 15 20 YorkInternational v. Republic v/iewtodetermining whether thebusiness of thecompanyis conductedin a manner oppressive to any part of its members or whether information is withheld from the members respecting the management of the affairs of the company Lastly, an inspection maybe authorizedwith aviewto identifying the circumstances of formation or the management of the affairs of the companyinordertodeterminewhetheranyparticularperson hasbeen guilty of faud, misfeasance orany othermisconduct
(3)Totheextentthats 159(b)isintendedtoelicittheexistence of evidence about the commission of a cnminal offence, the power given thereby is of an investigatory naturemextncably connected with thepower tomount a prosecution unders 163 of thesame law and, therefore, though thepublic as in every action investigatory of a crime, has a noticeable interest, the relevant actionisbothonpnncipleandonauthontyoutsidetheambitof Art 146 1of theConstitution
(4)To the extent that s 159(b) aims to protect the interests of the shareholders, with aviewtowinding up thecompanyorinstituting anaction for damages, the power is directly connected with theprotection of pnvate rights andas such isoutside thedomainof public law
(5)Inthe light of theabove this Courthas nojunsdiction to entertainthe recourse Recoursedismissed No orderas tocosts Casesreferredto Hellenic Bankν TheRepublic
(1986)3C LR 481, Frangosν MedicalDisciplinaryBoard
(1983)1CLR 256, Antoniouand Othersν TheRepublic
(1984)3 C LR 623, 25 Mahlouzanedsv 7heRepubhc
(1985)3C LR 2342, Republicν ΜDM EstateU9S2)3 C LR
- Kalisperasν Ministryof Intenor (\982) 3 CLR
- Kynahdes ν TheRepublic,1RS CC 66, Xenophontos ν TheRepublic, 2 RS CC 89 ο 0 Recourse. Recourse against the decision of the respondent to appoint inspectors, under the provisions of s. 159(b) of the Companies Law, Cap. 113 to investigateintothe affairs of the applicants T.Papadopoulos withP. loannides,for the applicants Cur. adv. vult 835 York International v. Republic
(1987)PIKIS J. read the following judgment. The applicants, an offshore company, challenge a decision of the Minister of Commerce communicated by the Registrar of Companies taken under and in pursuance to the provisions of s. 159(
- b)of the Companies Law, Cap. 113,whereby inspectors were appointed 5 to investigate its affairs. And a provisional order is sought to suspend the enforcement of the decision (communicated on 27.5.1987) pending adjudication on the validity of the subjudice decision.Before examiningtheapplicationforaprovisional order, I invited argument on the competence of the Court to take 10 cognizance on the subject-matter of the recourse. Specifically arguments were invited whether the impugned decision constitutes action of the administration in the domain of public law,a prerequisite for theassumption ofjurisdiction toreviewthe action under Art. 146.1 oftheConstitution. 15 In response, Mr. Papadopoulos referred us to cases shedding light on the attributes of administrative action in the domain of publiclawand adetailedanalysiswasmadeoftheprovisionsofs. 159(b)and the interest ofthe public inthe way these powers are exercised by the Administration. He submitted s. 159(
- b)is 20 intended toserve an importantpublicpurpose andthatthepublic has a constant and an abiding interest in the promotion of the purposes that s. 159(
- b)is designed to serve. To illuminate the background tos. 159(b),counselrefened theCourttos. 165(b)of the Companies Act 1948 (English) and the additional powers «conferred bys. 109 of theEnglish Companies Act 1967. Thecasetowhich lengthierreference wasmadeisthedecision in Hellenic Bank v. Republic*with a view to distinguishing it.In that case itwasheld that adecision oftheRegistrarof Companies pertaining to the registration of a mortgage under Part IIIof the 30 Companies Law s. 93 isnon-justiciable under Art. 146.1 of the Constitutionforthereasonthatitdoesnotqualify asadministrative action in the domain of publiclaw. Unlike a decision affecting the registration of a charge, the subject of review inthe Helleniccase, a decision under s. 159(
- b)35 involvesalargeelement ofdiscretionwithacorrespondingly high •
(1986)3C.L.R 481. 836 3 C.L.R. 5 York International v. Republic PUd»J. interestonthepartofthepublicinitsexerciseandthe promotion ofthe purposes intended tobeserved bythisprovision ofthelaw. Adecision unders. 159(b)aims,ifthisisanaccurate abbreviation ofthesubmission ofcounsel,toprotecttheinterestofthepublicin the management of the affairs of legal persona and not merely intended to safeguard the interest of those immediately affected thereby, that is, creditors and shareholders. On that account a decision under the relevant provision of the lawmayproperly be classified asadministrative action inthe domain ofpubliclaw. 10 Extensive reference was made to the criteria adopted or evolvedbyourcaselawwithaviewtodeterminingthejusticiability of different species of administrative action. A substantive, as opposed toaformaltestisapplied*referable totheintrinsicnature of the act and not merely to itsapparent attributes or source of 15 emanation. Counsel made reference to the test approved in Antoniou and Others v. Republic** for the delineation or demarcation ofthetwodomainsoflaw,publicandprivate,treated as authoritative after its approval by the Full Bench in Mahiouzarides v. Republic***. Two other decisions of the 20 Supreme Court were also discussed in some detail, namely, Republic v. M.D.M.Estate****and Kalisperas v. Ministryof Interior*****withaviewtohighlightingtheempiricalapproachof the Court in drawing the line dividing the two domains and the way publicinterest maywane inparticularareasofadministrative 25 action on account of changed social circumstances. Igave close consideration to the argument raised and madea careful studyof the provisionsofs. 159(b)inthe context inwhich they appear. Section 159(b) forms part of a section of the Companies Lawdesigned toprovide forofficial inspection ofthe 30 affairs of a company. Not only s. 159(b) throws light on the purpose forwhichthepowertodirectinspection isconferred,but s. 163ofthesamelawdoeslikewise,layingdownthatdepending ontheoutcomeofinspectionacriminalprosecutionforfraudulent conductmaybeinstituted,aswellasproceedingsforthewinding 35 up of the company and an action for damages (as provided in subsection 4).The foremost object ofs. 159(b) istoauthorizean official inspection of the affairs of a company with a view to •See,interaha,Frangosv. MedicalDisciplinaryBoard
(1983)1C.LR.256. "
(1984)3C.LR.623. "*
(1985)3C.LR.2342. ""
(1982)3CL.R.642(F.B.). •*"*
(1982)3C.LR509. 837 Ρ Μ · Λ. YorkInternational v. Republic
(1987)determining whether its business is managed with a view to defrauding thecreditorsoranyotherperson orfor afraudulent or unlawful purpose. Alsoinspection maybeauthorized with aview todeterminingwhetherthebusiness ofthecompanyisconducted in a manner oppressive to any part of its members or whether 5 information is withheld from the members respecting the management of theaffairs of thecompany.Lastly,aninspection maybe authorized withaviewtoidentifying thecircumstancesof formation or the management of the affairs of the company in ordertodeterminewhether anyparticularperson hasbeen guilty 10 of fraud, misfeasance orany othermisconduct. Totheextentthats. 159(
- b)isintendedtoelicittheexistenceof evidence about thecommission of a criminal offence, the power giventhereby toauthorizeinspection isofaninvestigatory nature inextricably connected with the power to mount a prosecution 15 unders. 163 of thesame law. Evidently because of thenatureof the crimes to be investigated, the investigation is entrusted toa body other than thePolice,theState authority ordinarily trusted with theinvestigation ofcrime.As ineveryactioninvestigatory of crime,thewider publichasanoticeableinterestintheprocess;but 20 theactionisnotjusticiable underArt. 146.1,bothonprinciple,not being action primarily intended to promote a public purpose through theexerciseof administrative discretion andonauthority too-See,interalia,PhediasKyriakidesv.Republic*andCharilaos Xenophontos v. Republic**. Criminal prosecution and action 25 preliminary theretoare,undertheConstitution (PartVI, Cap.1), theprovince of anindependentofficer oftheState,the AttorneyGeneral trusted by the Constitution with the protection of the public interest in the investigation and prosecution of cnminal conduct. 30 Onthe otherhand,asfar as s. 159(
- b)aimstoprotect,through inspection,theinterest ofshareholders with aviewtowinding up the company or instituting an action for damages, the power is directly connectedwiththeprotectionofprivatelaw rightsandas such outside the domain of public law. Inthe latter respect the 35 natureofthepowergivenbys.159(b)isindistinguishable fromthe natureoftheactionreviewedintheHelleniccase(supra).And for muchthesame reasons itcannotbe thesubject of reviewunder Art. 146.1 of theConstitution. •IRSCC66. '•2RSCC89 838. 3 CL.R. York International v. Republic PikleJ Consequently, Ihave no jurisdiction to take cognizance of the application for a provisional order or of the relief sought in the main application. Therefore, I shall proceed to dismiss the recourse initsentirety and I so order. 5 Recourse dismissed. 839