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Glegola -v- Minister for Social Protection & ors
Neutral Citation:
[2017] IESCDET 143
Supreme Court Record Number:
Court of Appeal Record Number:
High Court Record Number:
2014 No 388 JR
Date of Determination:
Composition of Court:
O’Donnell J., McKechnie J., Dunne J.


Supporting Documents:
56-17 AFL (2).doc56-17 AFL (2).doc56-17 Rspndts Notce.doc56-17 Rspndts Notce.doc








RESULT: The Court grants leave to the Applicant to appeal to this Court from the Court of Appeal.


1. This determination relates to an application for leave to appeal to the Supreme Court from a judgment of the Court of Appeal (Finlay Geoghegan J., Peart and Hogan JJ.) delivered on the 24th February, 2017, and from the resulting Order of that Court dated the 10th March, 2017, and perfected on the 13th March, 2017.

2. The Minister for Social Protection, Ireland and the Attorney General, together referred to as “the applicants”, seek leave to appeal to this Court from the said judgment and Order of the Court of Appeal.

3. Magdalena Glegola, referred to in this Determination as “the respondent”, does not oppose the application for leave to appeal but asks the Court to restrict the grounds upon which any leave is given. The respondent then goes on to ask the Court to ultimately dismiss the appeal and/or to affirm the decision of the Court of Appeal but on grounds some of which are different from those set out in the judgment of that Court.


4. The jurisdiction of the Supreme Court to hear appeals is set out in the Constitution. As is clear from the terms of Article 34.5.3° thereof and the many determinations made by this Court since the enactment of the Thirty-third Amendment, it is necessary, in order for this Court to grant leave to appeal from a decision of the Court of Appeal, that it be established by the applicant that the decision sought to be appealed involves a matter of general public importance, or that it is otherwise necessary in the interests of justice that there be an appeal to this Court.

5. Any ruling in a determination is final and conclusive as far as the parties are concerned, and is a decision in relation to that application only. The issue to be determined on such an application is whether the facts and legal issues meet the constitutional criteria to enable this Court to hear an appeal. It will not, save in the rarest of circumstances, be appropriate to rely on a refusal of leave as having a precedential value in relation to the substantive issues in the context of a different case. Where leave is granted, any issue canvassed in the application will in due course be disposed of in the substantive decision of the Court.

Background and Procedural History

6. Being of the view that the reason given for her dismissal, namely, redundancy, was not genuine and that her employment was terminated unfairly, the respondent to this appeal obtained an award in the sum of €16,818.75 from the Rights Commissioner under the relevant domestic employment legislation. That award became binding and thus became a debt due from the company in question, the Metro Spa Limited, to Ms. Glegola.

7. In March, 2014 the respondent took a number of steps under the statutory provisions of the Companies Acts seeking a number of reliefs. Amongst these she sought, inter alia, first, to have her former employer restored to the register, it having previously been struck off for failing to file returns; secondly, an Order winding up the company; and, thirdly, an Order under section 251 of the Companies Act 1990. She was advised that if the Order last-mentioned was obtained, it would be sufficient in the circumstances to enable her to have the debt paid from the Social Insurance Fund (“the Fund”) established under the Protection of Employees (Employers’ Insolvency) Act 1984 (“the 1984 Act”), and also to satisfy the requirements of Article 2(1) of the EU Directive 2008/94/EC on the protection of employees in the event of the insolvency of their employer (“the Directive”). The petition was not advertised in the ordinary way as the only purpose of issuing it was to try and access the fund in question. On the 28th April, 2014, Charleton J. granted a number of Orders, including one purportedly made under section 251 of the 1990 Act; the adequacy of this Order has always been in dispute.

8. As the Department of Social Protection, being the relevant entity of the State, failed to discharge the debt above mentioned, the respondent instituted judicial review proceedings seeking a number of reliefs. She was unsuccessful in the High Court, with her claim being dismissed by a judgment of Hedigan J. delivered on 23rd June, 2015 ([2015] I.E.H.C. 428).

9. In her Notice of Appeal, the respondent made the following submissions to the Court of Appeal:

      (i) First, that the Declaration under section 251 was sufficient to trigger the provisions of Article 2(1)(b) of the Directive, which it was claimed had direct effect. Accordingly, the State was obliged to make the payment from the Fund as described.

      (ii) In the alternative, that the State had failed to fully transpose into Irish law the said Article in failing to have in place a procedure whereby, as part of the statutory scheme applicable to a petition to wind up a company by the court, a petitioner could, in the alternative, apply for an Order of the type envisaged by the said Article 2(1)(b) of the Directive.

      (iii) And, finally, if the argument last mentioned was well-founded, she contended that in accordance with the decision of the Court of Justice in Francovich & Bonifaci v. Italy (Joined Cases C-6/90 and C-9/90) (“Francovich”), she was entitled to an award of damages against the State in an amount equivalent to the said debt.

10. Under Article 2(1) of the Directive, an employer is “deemed to be in a state of insolvency” if either (a) a request has been made for the opening of collective proceedings based on the insolvency of the employer and for the appointment of a liquidator, or (b) if the court should declare that the undertaking or business has been definitively closed down, and that the available assets are insufficient to warrant the opening of proceedings (Article 2(1)(b)). This Directive, or more accurately its predecessor, was implemented into domestic law by the 1984 Act. The provision of relevance to this case is to be found in section 1(3)(c) thereof. Thereunder it is specified that an employer which is a company shall be, or shall be deemed to be, insolvent “if, but only if” one of a number of steps have been taken, such as the passing of a resolution for voluntary winding up, the making of a winding up Order by the court, the appointment of a receiver/manager etc.

11. Although the respondent was undoubtedly a creditor of the company and thus was a person who could petition for the winding up of the company under sections 213-214 of the Companies Act 1963, such a step was not realistic as there were no assets in the company from which a potential liquidator could be paid, and she herself was not in a position to financially support such a move. As none of the other steps mentioned in section 1(3) of the 1984 Act had been taken, she could not satisfy this provision. Hence her reliance on the Directive.

12. As no liquidator had been appointed it likewise followed that the first alternative given by Article 2(1) of the Directive could not be satisfied. It was therefore argued on Ms. Glegola’s behalf that the Order made under section 251 of the 1990 Act was sufficient to satisfy the provisions of Article 2(1)(b) thereof. If she could persuade the court to that effect she would have been entitled to receive payment from the Fund; otherwise, her only recourse was to seek damages from the State in accordance with the decision in Francovich.

13. In dealing with these issues the Court of Appeal held:

      (i) First, that the Declaration made under section 251 of the 1990 Act did not address the key issue, as the presiding judge felt that he was not in a position to declare that the business of the company had definitively closed down.

      (ii) In any event, that particular section, according to the judgment, did not confer on the High Court the necessary jurisdiction to make the type of Order envisaged by Article 2(1)(b) of the Directive. Therefore, in the absence of any other enabling provision, of which there was none, it followed that the court could not make an Order to reflect the position as outlined in that Article,

      (iii) Furthermore, the provisions of section 1(3) of the 1984 Act, namely, that one of the steps therein outlined must be taken before the company will be taken to have become insolvent, do not permit a claim against the Fund in circumstances of a ‘deemed state of insolvency’ where the only evidence to that effect is of the type specified in Article 2(1)(b) of the Directive.

Accordingly, the Court of Appeal held that the State had failed to correctly transpose that provision of the Directive into domestic law.

14. The Court then addressed the alternative claim for damages under the principles in Francovich. In applying well-established criteria, the Court held that the seriousness of the state’s omission was such as to warrant an award of damages. Having referred to other matters as articulated in the judgment, the Court was ultimately satisfied to declare that the respondent was entitled to recover damages against the State, in the sum above mentioned, for its failure to correctly transpose Directive 2008/94/EC.

Appeal to this Court

15. The applicants seek leave to appeal against the said judgment and Order of the Court of Appeal. The reasons submitted in support of their application are set out in detail in the Application for Leave and Notice of Appeal documents. The respondent does not oppose the entirety of this application but asks the Court to restrict the grounds on which leave is granted, and ultimately to dismiss the appeal. The respondent also requests this Court to affirm the decision of the Court of Appeal but on grounds other than those set out in the judgment of that Court. The respondent’s reasons for adopting this course are likewise set out in her replying document. These documents are available with this determination on the Courts Service website; accordingly, the parties’ reasons are set out here in summary form only.

Application for Leave and Notice of Appeal

16. The applicants seek to set aside the Orders of the Court of Appeal, including that relating to damages, and to restore the Order of the High Court. They also seek an order that the respondent pay the entire legal costs of these proceedings, being those incurred and/or likely to be incurred. Whilst they have not expressly requested that this Court to make a reference to the Court of Justice of the European Union (“CJEU”), they have noted that the Court may of itself form the view that a reference may be necessary so as to enable it to give final judgment.

17. The applicants submit that the judgment of the Court of Appeal relates to a matter of general public importance concerning the implementation by Ireland of Article 2 of Directive 2008/94/EC and, in particular, whether Article 2(1) is disjunctive or not. This is alleged to be a matter not just of Irish importance but also of EU importance, given the lack of any judicial determination on this issue by the CJEU. It is further claimed that the judgment of the Court of Appeal is of general importance given its ramifications for ‘informal insolvencies’ and for Irish company law: in particular, issues arise as to whether the Directive demands that a separate definition of ‘insolvency’ be put in place, and/or whether an expanded definition of that term, as currently defined under Irish company law, is necessary. It is also claimed that the judgment sought to be appealed is of general importance in light of its potential economic impact on the State and, in particular, the financial sustainability of the Social Insurance Fund. The applicants allege that allowing access to the Fund in informal insolvency situations creates a risk of opportunistic and unjustified claims.

18. The applicants further submit, without prejudice to their contention that the State has implemented Article 2 of the Directive in a lawful and correct manner, that leave to appeal should be granted in respect of those parts of the judgment of the Court of Appeal pertaining to the test for and application of Francovich damages; this both in a general sense and also in its specific application against the State on the facts of the within proceedings. This is said to be a matter of general public importance. In particular, the applicants dispute that the obligations on Member States under Article 2(1) are set out with ‘clarity’. They contend that the obiter remarks of Laffoy J. in Re Davis Joinery [2013] 3 I.R. 792, cannot be a substantive factor in finding the State liable for damages under Francovich. The applicants question whether the conditions for a finding that the State “manifestly and gravely disregarded the limits of its discretion” (per the test set out in Brasserie du Pecheur [1996] ECR I-1029) were met on the facts of this case. It is said that a matter of general importance is the ‘assessment and respect’ for legislative choice under the Directive, and whether the implementation approach chosen by a Member State, although ultimately deemed incorrect, is an ex ante reasonable interpretation to have adopted. Finally, the applicants claim that the Court of Appeal placed insufficient weight on the fact that no infringement proceedings have been brought by the EU Commission against Ireland in this area of the law.

Respondent’s Notice

19. Ms. Glegola accepts that insofar as the Court below found that Article 2(1)(b) of the Directive imposes an obligation on the State to have a mechanism in place for dealing with informal insolvencies as envisaged by that Article, that is a matter of general public importance capable of affecting many persons in a similar position to the respondent. Thus she does not object to leave being granted to argue that point.

20. However, the respondent has requested the Court to restrict the grounds of appeal to that single point, and she disputes that the other matters raised by the applicants meet the constitutional threshold for leave to appeal. No leave is required to determine whether there should be a separate definition of “insolvency” under the Directive and under Irish law; various judgments of the CJEU have held that a “state of insolvency” under Article 2 is an autonomous matter of European law rather than national law, and that this is acte clair binding on this Court.

21. As to the alleged potential economic impact to the State, there has been no evidence to that effect and no evidence as to why the State cannot implement a system compatible with Article 2(1)(b) of the Directive, whilst at the same time putting in place safeguards to ameliorate any unacceptable or unintended risks. The applicants’ position means that the Fund cannot be accessed by employees who are unable to fund a liquidator, meaning that those who most need the system of social insurance for wages guaranteed to them by EU law, are denied access to it by a measure of national law which is incompatible with the Directive.

22. The respondent also opposes the granting of leave on the Francovich damages issue, alleging that the criteria for awarding such damages are well known and well established. The original Directive, with the requirement that a “state of insolvency” could be established without the appointment of a liquidator (80/987/EEC), was to have been transposed by 1983. Furthermore, the judgment in Re Davis Joinery was such that the State must have been aware of the issue which arises. Accordingly, in the absence of evidence that the State was not and ought not reasonably to have been so aware, the Court of Appeal was well justified in invoking and applying the Francovich principles.

23. The respondent does not request a reference to the CJEU but, in light of the matters raised, anticipates that one may be made.


24. Whilst it can never be decisive that the parties are in agreement that either or both limbs of the constitutional threshold set out in Article 34.5.3° (or Article 34.5.4°, in the case of a leapfrog appeal) of the Constitution have been met, it is a factor of significance to this Court’s approach to the application. In addition, however, the Court must itself be satisfied that the matter raised comes within either of the criteria set out in the appropriate provision of the Constitution. In this case such agreement relates only to the correct interpretation of Article 2(1) of the Directive. Being otherwise independently satisfied that such issue is of general public importance, leave in respect thereof will be granted to the applicants to argue this issue.

25. Although agreeing that this Court should hear and determine the point last mentioned, the respondent opposes the granting of leave on any of the other grounds put forward by the applicants. Those grounds in essence relate, in a general sense, to determining what the appropriate test is for awarding Francovich damages, and more specifically concern the application of those principles to the facts of this case.

26. Notwithstanding the views so expressed by the applicant, it appears to this Court that the issues raised regarding the Francovich principles must be regarded as being closely connected to and intertwined with the Directive issue. Accordingly, it is not clear how the latter issue can be determined if isolated from the former. Both inform each other and in the Court’s view it would not be desirable for one only of these issues to be taken. In reality, the general question is “what are the rights in Irish law of a person in the position of Ms. Glegola when considered in the context of the Directive and of the State’s obligation to adequately transpose it into domestic law, so that a person seeking to rely upon it can have an adequate remedy before the national court?” Accordingly, this Court is also satisfied that what has been described as the “Francovich issue” also meets the constitutional threshold.

27. In consequence, the Court will grant leave to the applicant to appeal on the following grounds, namely, that:

      1.(a) The Court of Appeal erred in deeming Article 2(1)(b) to be mandatory notwithstanding the disjunctive wording of Article 2(1) and/or the reference in Article 2(1) to insolvency as a concept “…as provided for under the laws, regulations and administrative provisions of a Member State”

      (b) The Court of Appeal erred in failing to interpret Article 2 as requiring as a condition precedent the “opening of proceedings” which is solely based on insolvency law of Member States.

      2.(a) The Court of Appeal erred in law in failing to distinguish between a “clear cut” breach of EU law and Ireland’s implementation of Directive 2008/94/EC by way of a requirement of insolvency consistent with Irish company law’s definition on insolvency.

      (b) The Court of appeal erred in law in awarding Francovich damages on the basis that a wrongly held interpretative view (even if objectively and reasonably held) by a Member State equates to a “manifest breach”.

      (c) The Court of Appeal erred in law and/or in fact in its determination that the applicants were guilty of a manifest and grave disregard of its discretion by reference to the “clarity” of Article 2(2) when it is not clear, but opaque.

      (d) The Court of Appeal erred in law and/or fact in its determination that the appellants were guilty of a manifest and grave disregard of its discretion by reference to certain obiter comments by the High Court in Re David Joinery Ltd notwithstanding the specific lack of any jurisprudence from the Court of Justice of the European Union on the issue.

      (e) The Court of Appeal failed to accord any or any proper weight to the rationale for Francovich damages, i.e. a balancing exercise between protecting rights afforded under EU law with Member States’ right to exercise legislative discretion in implementing EU Directives.

      (f) The Court of Appeal failed to accord any or any proper weight to the distinct lack of any or any pertinent jurisprudence from the Court of Justice on the ambit of Article 2 of Directive 2008/94/EC.

      (g) The Court of Appeal failed to accord any or any proper weight to the nebulous wording of Directive 2008/94/EC and Article 2 in particular.

      (h) The Court of Appeal failed to accord any proper weight to the lack of Commission proceedings against Ireland.


28. The Court, therefore, grants leave to the applicants to appeal to this Court on the issues articulated at para. 27 on the grounds that the same constitute matters of general public importance, such grounds being subject to any further refinement which may take place during the case management process.


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