Central Bank Of Ireland v CD

1 [APPROVED] [REDACTED] THE HIGH COURT [2026] IEHC 203 Record No. 2022 No. 83 MCA IN THE MATTER OF AN APPLICATION PURSUANT TO SECTION 45 OF THE CENTRAL BANK REFORM ACT 2010 BETWEEN CENTRAL BANK OF IRELAND APPLICANT AND CD RESPONDENT JUDGMENT of Mr. Justice David Barniville, President of the High Court, delivered on the 31st day of March, 2026 [Redactions confirmed on the 17th day of April 2026] 2 Index 1. Introduction…………………………………………………………………………4 2. Hearing otherwise than in public: Section 45 (3) of 2010 Act……………………4 3. Summary of Prohibition Notice…………………………………………………....6 4. Brief Overview of Parties’ Positions……………………………………………….7 5. Summary of Court’s Decision……………………………………………………...9 6. Factual Background……………………………………………………………….21 (a) The Parties…………………………………………………………….………..21 (i) The Central Bank……………………………………………………….21 (ii) The Respondent…………………………………………………………22 (b) Issues with EF absolute return bonds…………………………………….…..24 7. Relevant Statutory Provisions…………………………………………………….26 8. The investigation into Respondent’s fitness and probity under Part 3 of 2010 Act…………………………………………………………………………………..45 (a) The July 2019 notice……………………………………………………………45 (b) The Respondent’s response to the July 2019 notice………………………….48 (c) The September 2019 notice…………………………………………………….50 (d) The appointment of the Investigator………………………………………….53 (e) The evidentiary notices…………………………………………………………53 (f) The resignation of the Respondent……………………………………………..55 (g) The statement of grounds…………………………………………………...…..55 (h) The response to the statement of grounds……………………………………..57 (i) Correspondence between Arthur Cox and the Investigator…………………..59 (j) The conclusion of the information gathering stage of the investigation……...64 9. The s. 41 Report…………………………………………………………………….67 10. Respondent’s submissions on the s. 41 report…………………………………….74 11. The Decision-Making Process under Part 4 of the 2010 Act…………………….80 12. The Meeting with the Decision-Maker on 17 September 2021………………….83 13. The Regulation 13 Notice………………………………………………………….89 3 14. Respondent’s Submissions in response to the Regulation 13 Notice……………95 15. The Prohibition Notice……………………………………………………………..98 16. The Application for Confirmation: Evidence on the Application…………...….114 17. The applicable test for court confirmation under section 45 of the 2010 Act….122 18. The Issues…………………………………………………………………………..131 19. The ultra vires issue…………………………………………………………...........132 (a) Summary of the submissions of the parties…………………………………132 (i) The Central Bank…………………………………………….………..132 (ii) The Respondent………………………………………………………..135 (b) Decision on ultra vires issue………………………...………………......……137 20. Whether there was a reasonable basis for the opinion and process: sections 43 and 45 of 2010 Act: Fair Procedures Issues…………………..…...............…………….....147 (a) Summary of the submissions of the parties…………………….………....147 (i) The Central Bank……………………………………………………...147 (ii) The Respondent………………………………………………………..154 (b) Decision on reasonable basis of opinion: Fair Procedures Issues…..……160 21. Set aside/remittal…………………………………………………………………..181 22. Conclusions………………………………………………………………………...183 4 1. Introduction 1. This is my judgment on an application brought by the Central Bank of Ireland (the “Central Bank” or the “Applicant”) for an order pursuant to s. 45(1) of the Central Bank Reform Act 2010 (the “2010 Act”) confirming a Prohibition Notice which was issued by the Central Bank to the Respondent, CD, on 2 February 2022 pursuant to s. 43(1) of the 2010 Act (the “Prohibition Notice”). I provided the parties with my written decision on the application on 2 May 2025. This judgment sets out the detailed reasons for my decision. 2. The Prohibition Notice prevented the Respondent from performing certain significant functions in relation to all financial service providers regulated by the Central Bank since it was issued. 3. Section 45 of the 2010 Act requires the Central Bank to apply to the High Court for confirmation of the Prohibition Notice, and there are specific statutory provisions governing the court’s consideration and determination of such an application. 2. Hearing otherwise than in public: Section 45 (3) of 2010 Act 4. At the outset of the hearing of the Central Bank’s application to confirm the Prohibition Notice, the Respondent applied for the hearing to be heard otherwise than in public under s. 45(3) of the 2010 Act. That section provides that when hearing an application under s. 45(1) of the 2010 Act for confirmation of a prohibition notice, where the court is satisfied that “for reasons of confidentiality or commercial sensitivity” or in order to avoid the disclosure of certain specified information, the court may order that the hearing be conducted otherwise than in public. As a fallback decision, the Respondent sought to rely on the common law jurisdiction outlined by the Supreme Court in Gilchrist v Sunday Newspapers [2017] IESC 16, [2017] IR 284 for the proceedings to be heard otherwise than in public or, alternatively, for orders anonymising the Respondent and redacting any information which would tend to identify him. The Respondent 5 relied on various matters including the fact that he had provided deeply personal information in the course of the proceedings in relation to his health and medical condition, his financial concerns and the impact of the investigation and the issuing of the Prohibition Notice on him and on his family. He further referred to the serious risk that the Central Bank’s application, if heard in public, would immeasurably damage his professional reputation, his good name and his ability to earn a livelihood and to provide for his family in the future. He contended that his rights and interests would be irremediably damaged if he were identified. The Central Bank neither consented nor objected to the Respondent’s application for the proceedings to be heard otherwise than in public although it did not accept that potential damage to reputation or livelihood were appropriate grounds for the granting of relief under s. 45(3). That position was adopted by the Central Bank because of the specific circumstances of these proceedings and, in particular, because of the fact that the Respondent was subject to the effects of the Prohibition Notice since February 2022 in circumstances where almost the entirety of the 12 month prohibition period had elapsed before the hearing of the application commenced (without the fault of any party). 5. Having considered the parties’ helpful written submissions on the point and their oral submissions at the commencement of the hearing, I was satisfied that this was an appropriate case for the court to make an order under s. 45(3) of the 2010 Act that the hearing be held otherwise than in public. I was satisfied that the approach adopted by the Central Bank in response to the application was significant and that it was open to me on the particular circumstances of the case to conclude that for reasons of confidentiality combined with the timing point identified by the Central Bank, the hearing should be held otherwise than in public. My decision on that issue was based on the very particular circumstances of this case and should not necessarily be taken as a precedent which will be applied in other cases. Although the hearing was held otherwise than in public, an appropriately redacted version of this judgment will be made public. 6 3. Summary of Prohibition Notice 6. The Prohibition Notice was issued by the Central Bank in circumstances where, following an investigation carried out by an investigator (the “Investigator”) on behalf of the Deputy Governor (Prudential Regulation) of the Central Bank (the “Deputy Governor”) under Chapter 3 of Part 3 the 2010 Act, a decision maker appointed by the Central Bank under Chapter 4 of Part 3 of the Act (the “Decision-Maker”) concluded that, on three grounds, the Respondent should be prohibited from carrying out any “controlled functions” (being certain prescribed functions under the 2010 Act) with respect to any regulated financial service provider for the period of the notice. 7. In summary, the three grounds were as follows: (i) Ground 1: The Respondent’s competence as a “Designated Person”. The Decision-Maker was satisfied that the Respondent had not competently discharged the role of “Designated Person for Investment Management” (a “controlled function”) in the investment fund management company in which he was employed, (EF Fund ManCo), and that he had not demonstrated the appropriate capability appropriate to that particular controlled function. She also concluded that the Respondent did not have the competence and skills appropriate to that function, notwithstanding his 30 years of experience. She was satisfied that, for various reasons, the Respondent had not discharged the specific responsibilities applicable to that function. The Decision-Maker, therefore, concluded that the Respondent did not have the competence and proficiency to carry out that function or any “controlled function”. (ii) Ground 2: The Respondent’s conduct of concurrent responsibilities. The Decision-Maker concluded for various reasons that the Respondent allowed the conduct of concurrent responsibilities to prevent him from effectively carrying out his regulatory and fiduciary responsibilities to EF Fund ManCo and that this 7 impaired his ability to discharge his duties as Chief Executive Officer, Executive Director and Designated Person within EF Fund ManCo. (iii) Ground 3: The Respondent’s openness and transparency with the Central Bank. The Decision-Maker concluded that, for various reasons, the Respondent was not “candid and truthful” and was not “full, fair and accurate in all respects” in his dealings with the Central Bank. 8. The Decision-Maker concluded that, in respect of each of these grounds, the Respondent breached certain provisions of the “Fitness and Probity Standards” issued by the Central Bank in 2014 under s. 50 of the 2010 Act (the “Standards”). 4. Brief Overview of Parties’ Positions 9. The Respondent strenuously denies the allegations against him and disputes the conclusions and findings reached at the investigation stage and at the decision-making stage of the process in respect of each of the three grounds referred to above. He has challenged the entitlement of the Central Bank to conduct the investigation and to issue the Prohibition Notice on vires grounds and also on the grounds that his rights to natural and constitutional justice and basic fair procedures were breached at several stages of the investigation and the decision-making process. The Respondent contends that, notwithstanding the possibility of very serious findings and very serious consequences for him from the outset of the commencement of the investigation and throughout the investigation and decision-making process, and notwithstanding that his credibility and honesty were very much at issue, (a) he was never interviewed, (b) persons who were identified by him as being in a position to give relevant evidence were never interviewed, nor was their evidence taken by the Investigator, (c) he never had an oral hearing, (d) a belated meeting with the Decision-Maker towards the very end of the process was no more than a “box ticking” exercise which could not and did not remedy the earlier defects in the procedures applied to him. 8 10. The Central Bank maintains that the Court should confirm the Prohibition Notice under s. 45 of the 2010 Act based on its contention that there is a “reasonable basis” for the opinion of the Central Bank that the Respondent is not of such fitness and probity as is appropriate to perform any “controlled function”. The Central Bank contends that there is a reasonable basis for its opinion for the purposes of s. 45(6) of the 2010 Act in that the opinion and the “process that led to its formation” were not vitiated by: “(a) any significant and serious error or series of such errors, (b) a mistake of law, or (c) the evidence, taken as a whole, not supporting the finding.” 11. The Central Bank submits that in considering whether such a “reasonable basis” exists, the Court is required under s. 45(6) to take into account “the expertise and specialist knowledge possessed by the [Central] Bank” and, under s. 45(7), to have “particular regard” to certain matters, namely, “the need to prevent potential serious damage to the financial system in the State and ensure the continued stability of that system” and “the need to protect users of financial services”. It contends, therefore, that should the Court conclude that there is a “reasonable basis” for the Central Bank’s opinion as set out in the Prohibition Notice, the Court should confirm that notice under s. 45. 12. In response, the Respondent first contends that the entire process, namely, the investigation and the decision to issue the Prohibition Notice was ultra vires the Central Bank since the Respondent resigned from all of his positions in EF Fund ManCo in February 2020, after the investigation commenced, and no longer holds any position involving any “controlled function”. He contends, following his resignation, that the Central Bank was not entitled to continue to conduct the investigation and to issue the Prohibition Notice. Without prejudice to that contention, the Respondent relies on the several alleged breaches of natural and constitutional justice and fair procedures summarised earlier as a basis for the Court to conclude that there is not a “reasonable 9 basis” for the Central Bank’s opinion set out in the Prohibition Notice because of significant and serious errors and mistakes of law by the Central Bank and that the Court should refuse to confirm the notice. 13. The Central Bank rejects the contention that the investigation and decision to issue the Prohibition Notice was ultra vires its powers under the 2010 Act and that once the Respondent held a role involving a “controlled function” when the decision to commence the investigation was made, it was entitled to continue with the investigation and subsequent decision-making process notwithstanding the Respondent’s resignation from his “controlled function” roles in February 2020. It further disputes the contention that there was not a “reasonable basis” for the opinion that it was necessary to issue the Prohibition Notice to the Respondent. It denies the alleged breaches of natural and constitutional justice and fair procedures relied on by the Respondent and contends that the opinion (and process that led to its formation) were not vitiated by any significant error or mistake of law under s. 45(6) of the 2010 Act. It maintains, therefore, that the Court should confirm the Prohibition Notice under s. 45(5). 5. Summary of Court’s Decision 14. In summary, for the detailed reasons set out in this judgment, I have reached the following conclusions on the issues raised in this application. 15. On the first issue, I have concluded that, contrary to the position advanced by the Respondent, the conduct of the investigation and the decision to issue the Prohibition Notice were not ultra vires the powers of the Deputy Governor (in the case of the investigation) and the Central Bank (in the case of the decision to issue the Prohibition Notice) under Chapters 3 and 4 of Part 3 of the 2010 Act on the ground that the Respondent had resigned from his roles with EF Fund ManCo in February 2020 after the investigation had been commenced but before it was completed and before the decision to issue the Prohibition Notice was taken by the Decision- 10 Maker on behalf of the Central Bank. Since the date of his resignation, the Respondent has not held the position of “Designated Person” within EF Fund ManCo or elsewhere and has not held any position involving the performance of any “controlled function” or “pre-approval controlled function”. Nonetheless, I am satisfied that the relevant opinion for the purposes of the commencement and conduct of the investigation was formed at a time when the Respondent did hold more than one relevant controlled function and, in my view, it was open to the Deputy Governor to commence and conduct the investigation into the fitness and probity of the Respondent to perform the relevant controlled functions. It also follows, having regard to the close interconnection between the investigation carried out and the s. 41 Report prepared by the Investigator on behalf of the Deputy Governor under Chapter 3 and the decision to issue a Prohibition Notice under Chapter 4 (which is clear (inter alia) from s. 43(3)(a) of the 2010 Act)), that the decision by the Decision-Maker on behalf of the Central Bank to give consideration and to decide to issue the Prohibition Notice in relation to the Respondent under s. 43 was not ultra vires on that ground. Therefore, I reject the Respondent’s submissions that the commencement and conduct of the investigation and the decision to issue the Prohibition Notice were ultra vires the powers of the Deputy Governor and the Central Bank under Chapters 3 and 4 of Part 3 of the 2010 Act on the ground that the Respondent had resigned from all positions involving the performance of a controlled function in February 2020. 16. However, on the second issue, I have reached the conclusion that I should not confirm the Prohibition Notice under s. 45 on the basis that I am not satisfied there is a “reasonable basis” for the Central Bank’s opinion that the Respondent is not of such fitness and probity as is appropriate to perform the relevant “controlled functions”. The reason why I am not so satisfied is because, in my view, the opinion (before and after formation and the process that led to its formation) was vitiated by a series of significant and serious errors. While the burden lay on the Central Bank under s. 45(6) of the 2010 Act to establish that the relevant opinion was not vitiated 11 by such errors (or mistake) and while I am satisfied that the Central Bank has not discharged that burden in the particular circumstances of this case, I would have reached the same conclusion even if the burden under the section lay on the Respondent to establish the existence of such errors. 17. The principal reason for that conclusion is that, in my view, there were serious breaches of the principles of natural and constitutional justice and basic fairness of procedures as well as failures by the Central Bank (through the Investigator and the Decision-Maker) to exercise discretions provided for in the 2010 Act and the Central Bank Reform Act 2010 (Procedures governing the conduct of Investigators) Regulations 2012 (S.I. No. 56 of 2012) (the “2012 Regulations”) in compliance with those principles. 18. It is beyond question that the Investigator, in carrying out his role on behalf of the Deputy Governor under Chapter 3 of Part 3 of the 2010 Act and the Decision-Maker, carrying out her role on behalf of the Central Bank under Chapter 4 of Part 3 of that Act, were required to act fairly and in accordance with the requirements of natural and constitutional justice and basic fairness of procedures as well as being obliged to comply with the provisions of the 2010 Act and the 2012 Regulations. Insofar as those provisions provided for the existence of a discretion on the part of the Investigator and on the part of the Decision-Maker, in terms of the procedures to be afforded to the Respondent in the particular circumstances of the case, it was to be presumed that such discretions would be exercised and procedures adopted in a manner which complied with the constitutional guarantee of basic fairness of procedures (East Donegal Co-Operative Society Limited v Attorney General [1970] IR 317, per Walsh J at p. 341). It is also the position that on the basis of the case law that the precise content, nature and extent of the fair procedures required to be afforded to a person such as the Respondent will depend on the particular circumstances and context of the process or inquiry at issue, and that it is necessary to look at the entirety of the process and to consider that process as a whole in order to determine whether the 12 procedures applied have been fair to the person affected (see, for example, Crayden Fishing Company v Sea Fisheries Protection Authority [2017] 3 I.R. 785 and Facebook Ireland Ltd v Data Protection Commission [2021] IEHC 336). The more serious the issues involved and the more serious the consequences for the person the subject of the relevant investigation and decision-making process, the more extensive the procedures must be. 19. The allegations made against the Respondent in this case from the very outset were extremely serious, as was the potential outcome of the process for the Respondent. From the very start of the process when consideration was being given as to whether the Deputy Governor would commence an investigation into the fitness and probity of the Respondent, the relevant officer in the Central Bank informed the Respondent in a notice of intention to commence an investigation into the fitness and probity of the Respondent pursuant to s. 25 of the 2010 Act in July 2019, that it had concerns regarding his competence and capability to perform his controlled function roles and it had concerns that there were possible reasons to suspect his fitness and probity. In relation to his probity, the Central Bank expressed concern that the Respondent may have provided information to the Central Bank that he knew or ought to have known was false and/or misleading and that he may have misled representatives of the Central Bank at certain meetings in July and August 2018. 20. The notice commencing the investigation under s. 25 of the 2010 Act in September 2019 expressly recorded that an opinion had been formed on behalf of the Deputy Governor that there was reason to suspect the Respondent’s fitness and probity to perform the relevant controlled functions in respect of EF Fund ManCo and that, in the circumstances, an investigation into his fitness and probity was warranted. In that notice, it was recorded that there was prima facie evidence that the Respondent did not comply with his obligations to be open and cooperative with the Central Bank, to have an awareness of the relevant legal and regulatory environment and to manage conflicts of interest, that there was reason to suspect that the Respondent’s fitness and 13 probity to perform controlled functions and that an investigation into his fitness and probity under s. 25 of the 2010 Act on a number of potential grounds was warranted. 21. It was clear, therefore, from the very outset that very serious allegations were being made against the Respondent – among the most serious allegations that could be made against a person in his position - and that the consequences for the Respondent if those allegations were upheld would be extremely serious in terms of his credibility and good name and potentially catastrophic for his ability to continue to work in his chosen field. I have concluded that, in the particular circumstances, the Respondent was entitled to the full range of rights identified in Re Haughey [1971] IR 217 and, in any event, far more extensive procedural protections than were allowed to him by the Central Bank and those involved at all stages of the investigation and decision-making process that led to the making of the Prohibition Notice. 22. Notwithstanding that the Respondent was repeatedly described by the Investigator as the “key witness” and the “primary witness” in the case, the Investigator never interviewed the Respondent at all and concluded the information gathering stage of the investigation on 27 November 2020 without any notice to the Respondent or his solicitors and without ensuring that an opportunity or further opportunity was given to the Respondent to be interviewed. I am also satisfied that the Investigator failed to have sufficient regard to the fact that the Respondent was medically compromised at the time and unfairly concluded the information gathering stage of the investigation without reverting to the Respondent’s solicitors to afford the Respondent an opportunity to be interviewed before concluding that stage of the process. 23. The Investigator also failed to interview any of the persons whose names were provided by the Respondent’s solicitors to the Investigator with the reasons why those persons should be interviewed. They were not interviewed prior to the conclusion of the information gathering stage of the investigation or at all. The Investigator, in my view, wrongly and unfairly adopted the position that it was a matter for the Respondent to provide “submissions” from those persons 14 rather than interviewing them and providing their evidence to the Respondent as part of the investigation. 24. I am also satisfied that the Investigator adopted the wrong legal test and approach in determining whether some or all of those persons should be interviewed. He adopted the position that he did not require anything other than the Respondent’s “submissions” (sometimes confusing those submissions with “evidence”) and contemporaneous documentary evidence and that there were no gaps in the evidence which, in his view, made it unnecessary to obtain additional evidence from the persons identified by the Respondent. He rejected the need to obtain further evidence on the grounds of relevance and necessity. In doing so, I have concluded that he adopted the wrong legal test and approach under s. 32 of the 2010 Act and Regulation 3 of the 2012 Regulations and, wrongfully and in breach of the Respondent’s right to fair procedures, refused to interview and take evidence from any of those persons, in failing to focus sufficiently on the fact that the Respondent’s credibility, truthfulness and honesty were in issue and on the potentially enormously serious consequences for the Respondent in the event of adverse findings being made against him at the end of the process. 25. The Investigator also failed to provide any evidence in the form of statements of evidence or otherwise from those officials in the Central Bank who were alleged to have been misled and to whom it was alleged that the Respondent was not candid and truthful at the PRISM meeting on 24 July 2018 (although it has to be said that this was not a point advanced by the Respondent and would not, in itself, provide a basis for impugning the investigation but it is, in my view, a relevant cumulative factor for doing so together with the other breaches I have found). 26. The Investigator also acted wrongly and unfairly in failing to arrange for an oral hearing contrary to the Respondent’s right under s. 34 of the 2010 Act and Regulation 4 of the 2012 Regulations and as a matter of basic fairness of procedures in the circumstances. While the Respondent’s solicitors did not request an oral hearing before the information gathering stage of 15 the investigation was concluded (without notice to the Respondent’s solicitors) on 27 November 2020, almost all of the other conditions necessitating an oral hearing which are set out in Regulation 4 were present in this case. 27. There were facts in dispute including, in particular, whether the Respondent misled the Central Bank and was not candid or truthful at the meeting on 24 July 2018 or otherwise. The Respondent should have been given the opportunity of contextualising and explaining the contemporaneous materials through an oral hearing at which he and some or all of the other persons identified by him could give evidence to the Investigator. 28. Furthermore and, in my view, critically, the credibility and truthfulness of the Respondent was also very much at issue. The potential effect of the investigation on the Respondent was also so serious that fairness required an oral hearing. To illustrate the seriousness of the allegations against the Respondent, it is highly significant that (a) the Investigator recommended (in the s. 41 Report) that the Respondent be prohibited from performing all controlled functions in order to prevent potential serious damage to the financial system in the State and to protect the stability of that system and to protect users of financial services, and (b) the Decision-Maker was of the opinion (as expressed in the Prohibition Notice) that a failure to issue a prohibition notice would undermine confidence in the financial services industry as a whole, would fail to protect users of those services and would amount to a failure to prevent serious damage to the financial system. It is hard to imagine more serious allegations. In those circumstances, an oral hearing was clearly required at the investigation stage. It is unfathomable that no such hearing was afforded to the Respondent in these circumstances. 29. In addition to being required in the particular circumstances of the case under s. 34 of the 2010 Act and Regulation 4 of the 2012 Regulations, an oral hearing was also required in light of the clear challenge to the credibility of the Respondent on the basis of the established case law. I cannot see how the Investigator could have been satisfied that it was not necessary to have an 16 oral hearing bearing in mind (a) the very serious allegations being made against the Respondent (which involved a direct challenge to his credibility and truthfulness) and (b) the very serious consequences facing the Respondent in terms of his entitlement to work in his chosen field in the event of adverse conclusions being drawn by the Investigator and, subsequently, by the Decision- Maker. 30. I am satisfied that the fact that the Respondent’s solicitors did not request an oral hearing before the information gathering stage of the investigation was concluded in November 2020 was explicable on the basis that they were of the impression that the investigation was still at the information gathering stage and had not yet proceeded to the stage where an oral hearing was being contemplated. The Respondent’s solicitors had consistently requested in correspondence with the Investigator that fair procedures be afforded to the Respondent in the investigation. While the fact that an oral hearing was not requested prior to the completion of the information gathering stage in November 2020 is certainly a factor to be taken into consideration, I attach relatively limited weight to that factor in circumstances where the Investigator himself explained in the s. 41 Report that he had considered whether it was necessary to hold an oral hearing and had ruled that out on the basis that there were no gaps in the evidence or any conflict of evidence that would warrant an oral hearing in light of the submissions which had been made by the Respondent and the “comprehensive contemporaneous evidence” (from the transcripts and other material, including the submissions made by the Respondent). 31. I do not accept that the decision not to hold an oral hearing was a reasonable, appropriate or fair exercise of the discretion which the Investigator had under s. 34 of the 2010 Act and Regulation 4 of the 2012 Regulations, as a matter of fairness, in the particular circumstances of this case. The Respondent was entitled to an oral hearing under those provisions, and such a hearing was, in my view, mandated by the requirements of natural and constitutional justice and basic fairness of procedures to which the Respondent was entitled. 17 32. I am satisfied that these failures together amounted to a series of significant and serious errors in an integral part of the process which ultimately led to the decision by the Decision- Maker to issue the Prohibition Notice. The process was, in my view, on the particular facts of the case, irretrievably tainted by those errors by the time the Decision-Maker came to consider whether to issue a Prohibition Notice. 33. One of the matters which the Decision-Maker had to consider at that stage of the process (under Chapter 4 of Part 3 of the 2010 Act) in deciding whether to issue a Prohibition Notice was whether the Respondent had been afforded “such a hearing in relation to the proposed issue of the Prohibition Notice as [was] necessary to do justice in the circumstances” (s. 43(3)(b)). While I accept that the “hearing” referred to in that provision concerns the proposed issue of a Prohibition Notice rather than a hearing in the course of the investigation at the earlier stage of the process under Chapter 3 of Part 3, the fact that no hearing was conducted at the investigation stage was clearly relevant and inextricably bound up with the assessment which the Decision- Maker had to carry out at the decision-making stage. I have concluded that in the particular circumstances of this case, and having regard to the very serious allegations and to the very serious consequences for the Respondent involved, the Respondent was entitled to an oral hearing at the investigation stage. While s. 43(3)(b) does not on its terms expressly require that a hearing be conducted by the Decision-Maker and while the 2012 Regulations do not make provision for a hearing at that stage, I am of the view that it would have been open to the Decision-Maker to have a hearing in order to meet the requirements of natural and constitutional justice and basic fairness of procedures on the basis that such a “hearing” was “necessary to do justice in the circumstances” (s. 43(3)(b)). However, that was not done here. Justice was unquestionably not done to the Respondent in the circumstances. 34. The “meeting” with the Decision-Maker to which the Respondent was invited on 17 September 2021, was neither an interview nor a hearing. The Respondent and his solicitor were 18 afforded the opportunity to make a submission, but the Respondent was not invited to give evidence. The Respondent was not asked any questions and was not in any way challenged by the Decision-Maker on the short submission that he made (which lasted about 22 minutes). A review of the transcript of that meeting and what transpired afterwards has left me with the clear impression that the Decision-Maker, in inviting the Respondent to the meeting, was merely going through the motions or ticking a box in a belated and ultimately futile attempt to remedy the failure to afford an oral hearing to the Respondent at the investigation stage. 35. In my view, it was incomprehensible that no question was asked of the Respondent at the meeting and that he was not challenged in any way on the submission that he made during the course of the meeting, including in relation to the allegation that he was not candid and truthful in his dealings with the Central Bank. 36. Following the meeting on 17 September 2021, the Decision-Maker issued a notice under Regulation 13 of the 2012 Regulations indicating that she was minded to issue a Prohibition Notice in relation to the Respondent. In the notice, the Decision-Maker indicated that she had formed the initial opinion that the Respondent was not candid and truthful and fair and accurate in his dealings with the Central Bank. The Decision-Maker had not raised this or any other criticisms of the Respondent with him or probed or asked him any questions during the course of the meeting a few weeks previously. The Decision-Maker then went on to issue the Prohibition Notice having, in the interim period, received a further written submission from the Respondent’s solicitors. 37. As noted earlier, the Prohibition Notice was extremely critical of the Respondent in terms of his fitness and probity and made very damaging adverse findings in relation to his credibility, finding his “evidence” to be unconvincing and concluding that he was not candid and truthful in his dealings with the Central Bank. The Decision-Maker concluded that, with respect to each of the grounds of alleged breach of the Standards advanced against the Respondent, there were no 19 conflicts of fact in the “contemporaneous evidence”, that no “additional witness evidence” was necessary and that she did not believe that the evidence of any other person could alter her opinion. That was not the correct test to apply. The Decision-Maker ought to have focused on the need to ensure that the Respondent’s right to fair procedures was complied with throughout the process, rather than taking the view that compliance with that right would not have altered her view. While I was not provided with any direct evidence from the Decision-Maker as part of the material forming part of the Central Bank’s application, I was left with the impression that the meeting to which the Decision-Maker invited the Respondent on 17 September 2021 was a belated attempt to rectify the absence of fair procedures at the investigation stage. To my mind, it was an entirely empty and ultimately futile exercise and did nothing to remedy the serious breaches of fair procedures at the investigation stage but rather compounded those prior breaches. 38. While the Decision-Maker could have ensured that a proper oral hearing was conducted, I acknowledge that the proper and preferable place for such a hearing was at the investigation stage. In any event, however, there was no “hearing” at the decision-making stage. That was so notwithstanding the very serious findings made in the Prohibition Notice and the enormously serious consequences for the Respondent in terms of his credibility, reputation, good name and livelihood. The Decision-Maker found that the Respondent was untruthful in his dealings with the Central Bank, and that he had misled the Central Bank. That finding (which could hardly have been more serious for the Respondent given his former controlled function roles and his decades working in the financial services sector) and the other very serious and damaging findings contained in the Prohibition Notice were reached without those matters ever having been put to the Respondent, other than in writing, and without the Respondent ever having been afforded a proper hearing where he could give evidence on oath and examine and cross-examine witnesses so that his credibility could be properly and fairly assessed as opposed to it being 20 assessed on the basis of written submissions and the short and futile meeting which took place on 17 September 2021. 39. In my view, and in the particular circumstances of the case, the Decision-Maker could not reasonably have been of the opinion that the Respondent had been afforded such a hearing in relation to the proposed issue of the Prohibition Notice or otherwise “as was necessary to do justice in the circumstances” as required by s. 43(3)(b) of the 2010 Act. I am further satisfied that the Decision-Maker made a significant and serious error or series of such errors in failing to have proper regard to the fact that, from the very outset of the investigation, the Respondent’s credibility and honesty were very much in question and that the ultimate consequences of the process could have incredibly serious consequences for the Respondent in her consideration of the procedures that were afforded to the Respondent during the investigation stage of the process and during the subsequent decision-making stage. She ought to have concluded that, by reason of these factors, in particular, the Respondent’s right to natural and constitutional justice and basic fairness of procedures, as well as his rights under the 2010 Act and the 2012 Regulations, were not complied with. Instead, she focused wrongly, in my view, on whether there were any gaps in the evidence or conflicts of evidence and whether the interviewing of persons and the holding of an oral hearing would have altered her view. 40. In considering whether there is a reasonable basis for the Central Bank’s opinion as set out in the Prohibition Notice, the Court is required to take account of the “expertise and specialist knowledge” possessed by the Central Bank (and those performing the relevant functions on its behalf under Part 3 of the 2010 Act). However, I am not satisfied that any significant deference can or should be afforded to the Investigator and the Decision-Maker in terms of the procedures afforded to the Respondent during the various stages of the process for which they were responsible and in terms of whether the procedures afforded to the Respondent were consistent with the requirements of natural and constitutional justice and basic fairness of procedures. I am 21 satisfied, on the basis of the case law, and from my consideration of the entire process, that no such deference should be afforded to those persons in terms of the procedures made available to the Respondent. 41. For these reasons, which I elaborate upon in greater detail in my judgment below, I am not satisfied that the opinion set out in the Prohibition Notice (and the process which led to its formation) was not vitiated by any significant and serious error or series of such errors. On the contrary, I am satisfied that the opinion (and the process that led to its formation) was vitiated by a series of significant and serious errors, being the many breaches of the Respondent’s right to natural and constitutional justice and basic fairness of procedures during the entirety of the process. In those circumstances, I have decided that I must refuse to make an order confirming the Prohibition Notice. On the contrary, I am satisfied that I should set aside the Prohibition Notice by reason of those errors. 42. Furthermore, I do not believe that it would be fair or appropriate, in the particular circumstances of the case, to remit the matter to the Central Bank for reconsideration, in circumstances where the Respondent has been subject to the Prohibition Notice since February 2022 and has suffered the consequences of that Prohibition Notice in terms of his ability to work in his chosen field for the entirety of that period. In my view, it would be extremely unfair and entirely inappropriate to remit the matter to the Central Bank in these very unique circumstances. I propose, therefore, to exercise my discretion in the very particular circumstances of this case to set aside the Prohibition Notice and not to remit the matter to the Central Bank. 6. Factual Background (a) The Parties (i) The Central Bank 22 43. The Central Bank is the body responsible under the 2010 Act for the statutory system for the regulation of persons performing certain important prescribed functions in relation to the provision of financial services by regulated financial service providers known as “controlled functions” and the subspecies of functions known as“pre-approval controlled functions” (ss. 20 and 22 of the 2010 Act and the Central Bank Reform Act 2010 (sections 20 and 22) Regulations 2011 (SI No. 437 of 2011) (the “2011 Regulations”). Such persons are subject to a fitness and probity regime, one of the core functions of which is to protect those dealing with persons exercising such functions and to ensure that such persons are competent, capable, honest, ethical, have integrity and are financially sound. The Central Bank exercises a gatekeeper type function in respect of persons exercising such functions. The relevant powers of the Central Bank in respect of persons exercising such functions are contained (inter alia) in Part 3 of the 2010 Act and in the 2012 Regulations. (ii) The Respondent 44. The Respondent has a lifelong background in the Irish financial services industry. He worked for various life assurance companies before qualifying as an accountant and eventually joined a firm called EF Fund ManCo. EF Fund ManCo is an Irish investment funds management company and a regulated financial services provider. EF Fund ManCo is a wholly owned subsidiary of EF Group, which, in turn, is a wholly owned subsidiary of EF Holding, a company listed on the Swiss Stock Exchange. EF Fund ManCo is authorised by Central Bank as an Undertaking for the Collective Investment in Transferable Securities (UCITS) management company and as an Alternative Investment Fund Manager (AIFM), two types of regulated collective investment funds governed by European Union legislation and national implementing measures including the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 (SI No. 352 of 2011), the Central Bank (Supervision 23 and Enforcement) Act 2013 (section 48(1)) (Undertaking for Collective Investment in Transferable Securities) Regulations 2015 (SI No. 420 of 2015) and the European Union (Alternative Investment Fund Managers) Regulations 2013 (SI No. 257 of 2013). 45. The Respondent held a number of important positions and performed a number of important functions in EF Fund ManCo until his resignation on 18 February 2020 following the commencement of the Central Bank’s investigation which ultimately led to the Central Bank’s decision to issue the Prohibition Notice in relation to the Respondent in February 2022. The Respondent held the position of Executive Director in EF Fund ManCo from 30 June 2000 until 18 February 2020. This was a “pre-approval controlled function” (with the designation PCF-1 under the relevant regulations). Under s. 23 of the 2010 Act a person cannot be appointed to perform a “pre-approval controlled function” unless the Central Bank has approved that appointment in writing. He held the position of Chief Executive Officer (CEO) from 1 July 2015 to 18 February 2020, which is also a “pre - approval controlled function” (PCF-8), and the position of EF Fund ManCo “Designated Person for Investment Management”, another “pre- approval controlled function” (PCF-39) from 18 September 2017 to 18 February 2020. A “Designated Person” is a person who carries out certain key managerial functions in a fund management company, which have been specifically identified by the Central Bank. The Central Bank requires fund management companies to identify a person (the “Designated Person”) who is the person responsible for monitoring and overseeing the managerial functions assigned to him or her. The Designated Person is essentially the fund management company's line of management which lies between the company’s board of directors and those to whom the board delegates certain tasks. It is a position of significant responsibility in the management of the affairs of the fund management company. The Central Bank issued a guidance document in December 2016 – Fund Management Companies – Guidance (December 2016) – which included guidance on how designated persons should carry out their roles (Part IV paras. 1 – 45, pp 30 – 43). 24 (b) Issues with EF absolute return bonds 46. The Fund, an Irish company, is a UCITS fund which is authorised by the Central Bank in Ireland. At the relevant time, EF Fund ManCo managed UCITS sub-funds on behalf of the Fund. EF International ManCo is a funds investment manager which was authorised by the UK’s Financial Conduct Authority (“FCA”). Both EF Fund ManCo and EF International ManCo were ultimately owned by EF Holding and are companies within the the group of companies (the “Group”) 47. As of April 2018, EF Fund ManCo had delegated the investment management of 48 of the 54 funds which it managed on behalf of the Fund to EF International ManCo under a co- investment management agreement. Included in these 48 funds were five sub-funds domiciled in Ireland which pursued what was termed as an Absolute Return Bond (“ARB”) strategy either directly or through what are known as “master-feeder” relationships (under the relevant regulations, a “feeder” sub-fund is one which invests at least 85% of its assets in units of another UCITS or a sub-fund of it known as the “master”. As of 27 June 2018, the five ARB sub-funds domiciled in Ireland (the “Irish ARB sub-funds”) had assets under management of approximately €2bn and were part of a larger portfolio of approximately €9.5bn worth of ARB funds managed by a man called GH, who was a portfolio manager then employed by EF International ManCo. 48. On 31 July 2018, EF Holding announced that GH had been suspended following an internal investigation due to what a EF press release at the time called “some of his risk management procedures and record keeping in certain instances”. The Central Bank was informed of GH’s suspension by EF Fund ManCo on 31 July 2018. Arising from GH’s suspension, the Board of the Fund resolved temporarily to suspend redemptions in four of the five Irish ARB sub-funds which were being managed by EF Fund ManCo and in respect of which the investment management functions had been delegated to EF International ManCo and GH. This had the effect that investors in those sub-funds were temporarily denied access to the funds. 25 49. It appears that the Central Bank subsequently discovered (from a whistle-blower’s report received by it from EF Fund ManCo in September 2018) that, on 16 March 2018, the FCA in the UK had received a disclosure from an internal whistle-blower at EF International ManCo which alleged irregularities in relation to GH’s investments in securities originated by IJ Investments. The Central Bank then engaged with EF Fund ManCo to establish the level of awareness at EF Fund ManCo of the events leading to the temporary suspension of redemptions in the relevant Irish ARB sub-funds on 1 August 2018. 50. GH was ultimately dismissed from EF/EF International ManCo for gross misconduct on 21 February 2019. EF International ManCo was fined £9.1m by the FCA in the UK in December 2021 for failing to manage conflicts of interest. GH was fined £230,037 for failing to manage conflicts of interest and for breaching EF’s gifts and entertainment policy. Exactly one year after the Central Bank was informed of GH’s suspension, the Central Bank issued to the Respondent a notice of intention to commence an investigation under s. 25 of the 2010 Act on 31 July 2019. The issuing of that notice set off a chain of lengthy correspondence and communications between the Respondent and his solicitors, Arthur Cox, and various officers of the Central Bank and a statutory process which ultimately led to the service of the Prohibition Notice on the Respondent in February 2022. The course of the correspondence and communications, and how that process was conducted by the Central Bank, is critical to many of the issues which I am required to determine in the Central Bank’s application for confirmation of the Prohibition Notice. However, before considering that correspondence and those communications and the process in detail, I should outline the relevant statutory provisions applicable to the Central Bank’s investigation and to its decision to issue the Prohibition Notice which it seeks to confirm in this application. 26 7. Relevant Statutory Provisions 51. The relevant statutory provisions are contained in Part 3 of the 2010 Act and in the 2012 Regulations which were made by the Central Bank pursuant to s. 53(2) of the 2010 Act. Part 3 contains the relevant provisions governing the investigation carried out in relation to the fitness and probity of the Respondent (Chapter 3) and the decision to issue the Prohibition Notice and the requirement for that notice to be confirmed by the Court (Chapter 4). Certain important miscellaneous provisions are contained in Chapter 5 of Part 3. 52. Investigations into the fitness and probity of certain persons are required to be carried out by the holder of the position which, at the time of the enactment of the 2010 Act, was known as the Head of Financial Regulation. The title of that position was changed by the Central Bank Commission to Deputy Governor (Prudential Regulation) (the “Deputy Governor”) in 2011 pursuant to s. 23 of the 2010 Act. Therefore, when the relevant provisions of the 2010 Act refer to the Head of Financial Regulation, they are now to be read as referring to the Deputy Governor and I will use that description when referring to the relevant statutory provisions. 53. Under section 52(2) of the 2010 Act (which is in Chapter 5), the Deputy Governor can appoint a person to perform a function of the Deputy Governor under Part 3 in certain circumstances. The Deputy Governor exercised that power in relation to the investigation into the fitness and probity of the Respondent in this case and appointed the Investigator to carry out the investigation in place of the Deputy Governor. 54. Either the Central Bank itself or the Governor, as the case may be, can issue a prohibition notice under Chapter 4 of Part 3 of the 2010 Act. Section 52(2A) permits the Central Bank to appoint another person to perform a function of the Bank under Part 3. The Central Bank exercised that power and appointed the Decision-Maker to take the relevant decision in relation to the issuing of the Prohibition Notice to the Respondent. 27 55. The power of the Deputy Governor to investigate the fitness and probity of certain persons is contained in s. 25 of the 2010 Act. The persons who may be subjected to such an investigation are outlined in s. 25(2). They include persons who perform a controlled function in relation to a regulated financial services provider, persons who such a provider proposes to appoint to carry out such a function and persons who the provider is considering to appoint to perform that function. Under section 25(1), in relation to any of those persons, the Deputy Governor (or his or her delegate) may conduct an investigation in accordance with Chapter 3 in relation to the fitness and probity of the person to perform the relevant controlled function where the Deputy Governor is of the opinion that: “(a) there is reason to suspect the person’s fitness and probity to perform the relevant controlled function; and (b) in the circumstances an investigation is warranted into the person’s fitness and probity,…” 56. Section 25(3) provides that, without prejudice to the generality of s. 25(1), the Deputy Governor may form the opinion referred to in s. 25(1) if there is “reason to suspect” one of a number of specified matters which are set out in sub-paragraphs (a) – (h) of section 25(3). Those matters include where: “(a) the person does not have the experience, qualifications or skills necessary to perform properly and effectively the controlled function, the part of a controlled function or any controlled function, as the case may be, (b) the person does not satisfy an applicable standard of fitness and probity in a code issued pursuant to section 50, (c) the person has participated in serious misconduct in relation to the business of a regulated financial service provider, 28 (ca) the person, being a person who has been appointed to perform a pre-approval controlled function, has failed to make a disclosure to the Bank under section 38(2) of the Central Bank (Supervision and Enforcement) Act 2013 or has made such a disclosure knowing it to be false or misleading in a material respect, (d) the person has directly or indirectly provided information to the Bank, the Governor or the [Deputy Governor] (whether pursuant to this Part or otherwise) that the person knew or ought to have known was false or misleading,…” 57. Section 25(3)(b) refers to the applicable standards of fitness and probity in a code issued pursuant to s. 50 of the 2010 Act. The Central Bank issued such a code in 2014 (Fitness and Probity Standards (Code issued under s. 50 of the Central Bank Reform Act 2010) (2014)) (the “Code”). The Code contains the relevant standards. The Central Bank also issued a Guidance on Fitness and Probity Standards in 2018. The Code specifies the standards of fitness and probity with which all persons performing controlled functions or pre-approval controlled functions must, at a minimum, comply. In order to comply with the Standards set out in the Code, the person to whom it applies is required to be: “(a) competent and capable; (b) honest, ethical and to act with integrity; and (c) financially sound.” (section 2.2 of the Code) 58. The Code further provides that any information provided by an individual pursuant to the Code to the Central Bank or to a regulated financial services provider “shall be candid and truthful and shall be full, fair and accurate in all respects and not misleading to the best of his or her knowledge” (section 2.3). The Code then sets out further detail in relation to the requirements to comply with the Standards. For example, s. 4.1 of the Code provides that a person must be able to demonstrate that his or her ability to perform the relevant function “is not adversely affected to a material degree” where (inter alia): 29 “(i) the person has been untruthful or provided false or misleading information to the Central Bank or been uncooperative in any dealings with the Central Bank;” 59. Chapter 3 of Part 3 of the 2010 Act also confers power on the Deputy Governor to suspend a person whose fitness and probity is or has been the subject of an investigation under s. 25. However, that power was not exercised in relation to the Respondent. 60. Chapter 3 contains provisions governing the taking of evidence and the procedures to be adopted for the purposes of an investigation into the fitness and probity of a person. Those provisions are supplemented by further provisions contained in the 2012 Regulations, which were made by the Central Bank under s. 53(2) of the 2010 Act. 61. The Central Bank also issued guidance in relation to such investigations in December 2011 – Guidance on Investigations under Part 3 of the Central Bank Reform Act 2010 (2011) (the “2011 Investigations Guidance”). 62. Section 32 confers a power on the Deputy Governor to serve a notice (called an “evidentiary notice”) on a person for the purposes of an investigation. The evidentiary notice may require the person to appear before the Deputy Governor “to give evidence about a matter”, “to provide information to [the Deputy Governor]” or “to produce a document for examination”. The Deputy Governor is empowered to serve such a notice if he or she is investigating the person’s fitness and probity under Chapter 3 or if the Deputy Governor believes on “reasonable grounds” that a person “may be able to give evidence or to produce a document relating to a matter concerning the fitness or probity of a person whose fitness and probity is being investigated under that Chapter”. In other words, the power can be exercised both in relation to the person who is the subject of the investigation and other persons who may be able to give relevant evidence. Section 32(3) provides for certain formal requirements in respect of evidentiary notices including the requirement that the relevant notice must “specify the matter to 30 which the evidence relates, or specify or describe the document to be produced or the information to be provided, as the case requires,…”. 63. The provisions of s. 32 are supplemented by Regulation 3 of the 2012 Regulations. Regulation 3(1) provides for the provision by the Deputy Governor of a statement (called a “statement of grounds”) to the person who is the subject of an investigation into his or her fitness and probity. The Deputy Governor is required to furnish such a statement where he or she forms the view, on the basis of the information in his or her possession, that it is “possible that adverse conclusions may be drawn” against the person. The statement must set out the Deputy Governor’s concerns as to the fitness and probity of that person and must include certain material, including “where the Deputy Governor has conducted interview(s) with any person, an account of the information provided by that person at such interviews” (Regulation 3(2)(b)) and “any other documentary material relevant to the concerns of the Deputy Governor” (Regulation 3(2)(c)). These provisions clearly envisage a situation where the Deputy Governor or the person appointed to carry out the investigation on behalf of the Deputy Governor obtains “information” or “documentary material” from others which in turn must be provided to the person the subject of the investigation. 64. Regulations 3(3) – (6) contain further important provisions relating to the gathering of evidence at the investigation stage. Regulation 3(3) provides (inter alia) that the person the subject of the investigation can request the Deputy Governor to obtain evidence from other persons. Clearly, however, the Deputy Governor’s power (and, in some cases, obligation) to obtain evidence from other persons is not dependent upon a request coming from the person the subject of the investigation: see, s. 32 of the 2010 Act. However, under Regulation 3(3), the person the subject of the investigation can provide a list of persons to the Deputy Governor who the subject believes “would be able to give evidence that relates to the matters set out in the statement of grounds”. That list must contain certain further information or particulars which are 31 set out in Regulation 3(4). The particulars which must be provided to the Deputy Governor include the name, address and contact details of the person together with “a description of the grounds upon which the subject or regulated financial service provider contends that the person would be able to give evidence that relates to a matter concerning the fitness and probity of the subject” (Regulation 3(4)(d)). Regulation 3(5) provides that where the subject furnishes such a list to the Deputy Governor, and the Deputy Governor decides to conduct one or more interviews with any such persons, the Deputy Governor is required to provide the subject “with an account of the information provided by such persons at those interviews”. However, Regulation 3(6) provides that nothing in the 2012 Regulations “shall be read as requiring the Deputy Governor in a particular case to conduct one or more interviews with any person contained in a list furnished to the Deputy Governor in accordance with paragraph (3)”. Of course, that does not mean that the Deputy Governor, or the person carrying out the investigation might not be required as a matter of fair procedures to conduct interviews with the subject or persons he or she may have identified under Regulation 3(3). When Regulation 3 refers in various subparagraphs to “interviews” with persons (such as in Regulations 3(2)(b), (5) and (6)), it is clearly referring to interviews for the purposes of obtaining “evidence” relating to matters concerning the fitness and probity of the subject of the investigation (the term “evidence” is used in s. 32(1)). 65. The significance of an evidentiary notice which the Deputy Governor is empowered to serve under s. 32(1) can be seen from the fact that failure to comply with such a notice is a criminal offence. Section 33 provides that a person who fails to comply with a requirement to appear before the Deputy Governor in compliance with an evidentiary notice commits an offence unless excused or released from attendance; s. 36(1) provides that a person commits an offence if the person fails to comply with a requirement to produce a document or to provide information to the Deputy Governor in compliance with an evidentiary notice, unless the person is excused or has a reasonable excuse under s. 36(2) to (4); and s. 37 provides that a person who appears 32 before the Deputy Governor in compliance with an evidentiary notice commits an offence if that person refuses or fails to give evidence in compliance with the evidentiary notice or refuses or fails to answer a question put to the person by the Deputy Governor or in cross-examination, unless the person has a reasonable excuse under s. 37(2) – (4). 66. The Deputy Governor has the power under s. 34(1) to hear oral evidence where he “is satisfied that it is necessary to do so for the proper conduct of an investigation” (s. 34(1)). The Deputy Governor may permit a person giving oral evidence to be cross-examined (s. 34(2)). Section 34(3) provides that the Deputy Governor shall determine the procedures for the conduct of proceedings in an investigation subject to any regulations made by the Central Bank under s. 53(2). The 2012 Regulations which were made under that section contain the detailed provisions governing oral hearings and the procedure to be followed at such hearings in the course of an investigation. Before turning to those provisions, it should be noted that s. 35 provides that, generally, evidence given or documents produced to the Deputy Governor by a person who appears before him or her in compliance with an evidentiary notice is required to be given or produced in private. There is provision for matters to be dealt with in public in certain circumstances in sections 35(2) and (3). Section 38 provides that evidence given to the Deputy Governor in an investigation under chapter 3 and any report prepared following that investigation on the basis of such evidence is “absolutely privileged”. 67. Regulation 4 of the 2012 Regulations elaborates on the circumstances in which oral hearings may be convened by the Deputy Governor. It is appropriate to set out the provisions of that regulation in full: “4(1) The Deputy Governor may, at any time following the receipt of the statement of grounds by the subject or any regulated financial service provider concerned, hear oral evidence where he is satisfied that it is necessary to do so for the proper conduct of an 33 investigation and he may convene an oral hearing for the purposes of hearing such evidence. (2) Without prejudice to the generality of paragraph (1), the Deputy Governor may be satisfied as to the necessity for an oral hearing in the following circumstances: (a) Where there is an issue of fact in dispute which cannot fairly be resolved without an oral hearing; (b) where the credibility of the subject or a witness needs to be tested; (c) where, having regard to the potential effect of the investigation on the subject, the Deputy Governor considers an oral hearing to be required in the interests of fairness; (d) where allegations of a serious nature have been made against the subject; (e) where the subject or a witness has requested that the Deputy Governor convene an oral hearing; or (f) of the Deputy Governor’s own motion. (3) Any request for an oral hearing by the subject, regulated financial service provider or holding company concerned, or witness shall be submitted in writing to the Deputy Governor and shall contain the particulars set out in paragraph (4). (4) The particulars referred to in paragraph (3) are: (a) a description of the grounds upon which the subject, regulated financial service provider or holding company concerned, or witness contends that an oral hearing is necessary for the proper conduct of an investigation; and (b) the name of any person which the subject, regulated financial service provider or holding company concerned, or witness wishes the Deputy Governor to require to appear at such an oral hearing. 34 (5) For the avoidance of doubt, nothing in these regulations shall be taken as imposing an obligation on the Deputy Governor to convene an oral hearing in any particular case.” 68. It will be seen from Regulation 4(2) that there are various different circumstances in which the Deputy Governor may be satisfied that an oral hearing is necessary. Those circumstances include where there is an issue of fact in dispute which cannot be fairly resolved without an oral hearing where the credibility of the subject or a witness needs to be tested, where fairness requires an oral hearing because of the potential effect of the investigation on the subject and where allegations of a serious nature have been made against the subject. It is clear also that it is not necessary for a request for an oral hearing to be made by the subject in order for the Deputy Governor to be satisfied that an oral hearing is necessary. A request from the subject is only one of a number of different circumstances which may satisfy the Deputy Governor as to the necessity for an oral hearing. Finally, in relation to Regulation 4, while Regulation 4(5) says that nothing in the Regulations imposes an obligation on the Deputy Governor to convene an oral hearing in any particular case, that does not mean that the Deputy Governor might not be required as a matter of fair procedures to exercise his or her discretion to convene an oral hearing is necessary in any particular case. 69. Regulation 6 provides for the conduct of proceedings at an oral hearing convened by the Deputy Governor. The purpose of the oral hearing is to obtain evidence (Regulation 6(1)). The subject of the investigation or witnesses can be questioned by the Deputy Governor and can be cross-examined. The subject can also be permitted to call evidence in defence and reply and to make oral submissions, where directed or invited by the Deputy Governor (Regulation 6(3)). Under Regulation 7, the subject is generally required to attend at an oral hearing in person and may be legally represented (although it appears the person must bear his or her own costs of such representation). Regulation 8 provides that the evidence of persons appearing at an oral hearing 35 must be given on oath or by affirmation, recognising the solemnity and seriousness of the occasion. The oath or affirmation is administered by the Deputy Governor. There are also provisions for the taking of evidence by video link and for the evidence to be transcribed (Regulations 9 and 10). 70. The investigation under Chapter 3 of Part 3 of the 2010 Act culminates in the preparation of a report by or on behalf of the Deputy Governor for consideration by the Central Bank and the Governor. Section 41(1) provides that “after carrying out an investigation under this chapter, the [Deputy Governor] shall prepare a report for consideration by the Bank and the Governor.” 71. Regulation 11 of the 2012 Regulations provides that where the Deputy Governor makes any finding as part of a report under s. 41, including a finding in relation to any of the matters referred to at s. 25(3)(a) to (h) of the 2010 Act, any such finding may be made on the balance of probabilities. Regulation 12(1) provides that, subject to para. (2), after carrying out the “information gathering stage” of an investigation, the Deputy Governor shall “(a) provide written notice to the subject of the investigation and any regulated financial service provider concerned informing those persons of the conclusion of that stage of the investigation and (b) within six months of issuing the written notice…serve a copy of a report prepared in accordance with section 41(1) of the Act”. Provision is made in Regulation 12(2) for the Deputy Governor to seek additional material and for the six-month time period referred to in Regulation 12(1)(b) to be suspended to allow for the provision of such additional material and any submissions in relation to it and for the resumption of that period from the expiration of the period for submissions. 72. The Deputy Governor is required under s. 41(2) of the 2010 Act to serve a copy of the s. 41 report on the person the subject of the investigation and on any regulated financial service provider concerned. Those persons may make submissions in writing to the Deputy Governor in relation to any matter in the report (s. 41(4)). Those submissions must be made within seven days 36 or within an extended period which the Deputy Governor considers reasonable in all the circumstances (s. 41(5)). 73. Paragraph 4.3 of the 2011 Investigations Guidance states that any submissions made in relation to the s. 41 report will be passed by the Deputy Governor to the Central Bank and to the Governor for their consideration. The Central Bank or the Governor, as the case may be, must consider those submissions before deciding to issue a Prohibition Notice (s. 43(3)(a)(i)(III)). 74. Paragraph 4.4 of the 2011 Investigations Guidance states that: “In the ordinary course, it is envisaged that the submissions made in relation to the s. 41 report will be of a legal nature only, as the subject and regulated entity will, in most cases, have had an opportunity to address issues of factual contention at the second stage of the investigation. Notwithstanding this, the subject and regulated entity will be at liberty to make such submissions as they consider relevant to the consideration of the report.” The reference to the “second stage of the investigation” in para. 4.4 is a reference to the second phase of the information gathering exercise in the investigation which is described in para. 3.4 of the document. This phase or stage arises where the outcome of the first stage indicates that it is possible that adverse conclusions may be drawn from the evidence obtained and commences with service of the statement of grounds together with copies of relevant materials including, where interviews have been conducted during the first stage, an account of the evidence given at those interviews. It also covers the conduct of interviews or oral hearings by the Deputy Governor, including where the subject of the investigation or the relevant regulated entity provides the Deputy Governor with details of persons who could give evidence relevant to the concerns expressed in the statement of grounds. Further details are provided in relation to the conduct of the oral hearing in para. 3.4 of the document. 75. The investigation into the fitness and probity of a person under Chapter 3, Part 3 of the 2010 Act concludes with the s. 41 report. Thereafter, the process moves to the decision-making 37 stage where the decision to be made is whether or not the Central Bank or the Governor, as the case may be, decides to issue a prohibition notice in relation to a person. Chapter 4 of Part III of the 2010 Act applies to this stage. Section 43 is the section of the 2010 Act which empowers the Central Bank or the Governor to issue a prohibition notice. Before turning to the provisions of that section, reference must be made to Regulation 13 of the 2012 Regulations. Although the 2012 Regulations apply for the most part to the investigation stage of the process, Regulation 13 applies to the early part of the decision-making stage. Regulation 13 provides that where the Central Bank and the Governor receive a copy of the s. 41 report together with any submissions made in relation to that report, the Central Bank or the Governor, as the case may be, must inform the person whose fitness and probity is under investigation and the relevant regulated financial service provider of two things, namely: (a) whether the Central Bank or the Governor is “minded to” issue a prohibition notice under s. 43 and, (b) if so minded, the entitlement of the person and the relevant financial service provider to make submissions to the Central Bank or the Governor, as the case may be, within seven days (or such longer period as the Central Bank or the Governor considers reasonable in all the circumstances) in relation to the proposed issue of the Prohibition Notice. (c) they must be informed of these things within three months of receipt of the s. 41 report. Where this has been done and where submissions have been made, Regulation 13(2) requires the Central Bank or the Governor to inform the person concerned and the relevant financial service provider of the decision as to whether to issue a prohibition notice within six months of receipt of the submissions. 38 76. Section 43 of the 2010 Act confers the power on the Central Bank or on the Governor, as the case may be, to issue a prohibition notice. The Prohibition Notice at issue in this case was purportedly issued by the Decision-Maker on behalf of the Central Bank rather than on behalf of the Governor. When referring to the statutory provisions relevant to the issuing of a prohibition notice and to its confirmation, I will, therefore, refer to the Central Bank only and not to the Governor. 77. Under s. 43(1), subject to s. 43(4), if the Central Bank “has reasonably formed the opinion that a person is not of such fitness and probity as is appropriate to perform a particular controlled function, a specified part of a controlled function or any controlled function…”, the Central Bank may issue a prohibition notice: “… forbidding the person – (a) to carry out the controlled function, the specified part of a controlled function or any controlled function, as the case requires, or (b) to carry out the controlled function, the specified part of such a function or any controlled function, as the case requires, otherwise than in accordance with a specified condition or conditions, either for a specified period or indefinitely.” 78. Section 43(1) refers to s. 43(4). That sub section provides as follows: - “(4) When considering whether to issue a prohibition notice, the [Central] Bank…shall have particular regard to— (a) the need to prevent potential serious damage to the financial system in the State and ensure the continued stability of that system, and (b) the need to protect users of financial services.” 79. Section 43(2) provides that, without prejudice to the generality of the provisions of s. 43(1), the Central Bank may form the opinion referred to in s. 43(1) if it is satisfied of certain matters. Those matters are then set out in paras (a) – (h). They are virtually identical to the grounds for 39 the commencement of an investigation set out in s. 25(3). Therefore, the Central Bank may form the relevant opinion if, for example, it is satisfied that the person does not satisfy any of the Standards set out in the Code and where it is found that the person has directly or indirectly provided information to the Central Bank which the person knew or ought to have known was false or misleading. 80. Section 43(3) provides that the Central Bank shall not issue a prohibition notice in relation to a person unless certain conditions are satisfied. Those conditions are set out in sub paragraphs (a) – (c). They are as follows: “(a) either— (i) all of the following requirements have been satisfied: (I) the [Deputy Governor] has conducted an investigation into the person’s fitness and probity in accordance with this Chapter; (II) section 41 has been complied with in relation to that investigation and the report of it; (III) the [Central Bank] … has considered the report and any submissions made…to the [Deputy Governor] in relation to any matter in the report, or, (ii) there are undisputed facts that in the reasonable opinion of the [Central] Bank…render an investigation unnecessary, and the person and any regulated financial service provider concerned have been afforded a reasonable opportunity to make a submission in relation to the matter, 40 (b) the person and the regulated financial service provider have been afforded such a hearing in relation to the proposed issue of the prohibition notice as is necessary to do justice in the circumstances, and (c) the [Central] Bank … is satisfied that the issue of a prohibition notice is necessary in the circumstances.” It should be noted that the Central Bank did not rely on the matters set out in s. 43(3)(a)(ii) in this case. In other words, it did not maintain that there were undisputed facts which rendered an investigation unnecessary. 81. The remaining subsections of s. 43 provide for details in relation to the terms of a prohibition notice, the effects of such a notice and when it is to come into effect. 82. Under s. 43(7), a prohibition notice: “(a) takes effect on first service on either the prohibited person or the regulated financial service provider concerned, and (b) if an application is made to the Court under section 45 before the notice ceases to have effect, continues to have effect until that application is determined by the Court or withdrawn.” 83. Section 43(7) further provides that “subject to section 46, (which does not apply in the present