The Dunnes Stores group has mounted a High Court action challenging the Minister for Enterprise and Employment, Ms Harney's inquiry into the affairs of two of its companies.

Mr Michael Cush, counsel for Dunnes Stores Ireland and Dunnes Stores Ilac Centre Ltd, told Mr Justice Smith yesterday the group had been granted leave to judicially review the Minister's decision.

The High Court proceedings, which effectively block any inquiry being held until the court has ruled on the Dunnes challenge, seek to quash the ministerial order setting up the inquiry under the Companies Act to look into the affairs of the two companies.

Leave to judicially review the Minister's decision was granted in camera by Mr Justice O'Higgins on August 4th last but the proceedings were listed yesterday in open court when Ms Harney sought an adjournment to file affidavits and documents of opposition.

Mr Cush told Mr Justice Smith the Dunnes Group was legally challenging certain aspects of the ministerial inquiry, including the appointment of certified accountant George Maloney as authorised officer.

Mr Cush said the appointment of the authorised officer on July 22nd last had come as a considerable surprise to both companies, not least that Mr Maloney had taken up the position. A number of concerns had been expressed to the Minister in relation to the appointment, but these had not been taken up by her and it had become necessary to institute judicial review proceedings on August 4th.

The matter had been heard by Mr Justice O'Higgins who granted leave to seek judicial review and made a number of ancillary orders. Since August 4th there had been a number of contacts between the Dunnes companies and the Minister and it had been learned that Mr Maloney had tendered his resignation.

"That has to be welcomed although to say so is in no way a slight on Mr Maloney. It is no fault of his that he has found himself in a position of conflict," Mr Cush said.

Mr Mark Sanfey, counsel for the Minister, told the court Mr Maloney, following his appointment, had received a letter from Ms Anne O'Brien, daughter of Ms Margaret Heffernan, a director of both companies, informing him she had in the past been advised on tax affairs by a company with which he was linked.

Mr Maloney had no knowledge of the matter referred to by Ms O'Brien, but had resigned as authorised officer because of the "perceived conflict of interest".

Mr Cush said he consented to the adjournment sought by the Minister to facilitate the filing of opposition papers but objected to the Minister seeking leave to appoint a new authorised officer, Mr Gerard Ryan. As matters stood it might be that the current proceedings were moot.

The application before Mr Justice O'Higgins for prohibition and injunction had been made by Dunnes Stores in camera but no application was being made to continue the proceedings in camera.

Mr Cush said the first relief sought in the August 4th proceedings was an order of certiorari quashing the decision which purported to appoint an authorised officer. A similar order had been sought quashing the decision of the Minister which purported to appoint Mr Maloney as authorised officer.

Mr Justice O'Higgins had granted leave to apply for judicial review and further that his order should act as a stay in any further proceedings by the Minister until a determination of the application for judicial review or further court order.

Mr Cush said he objected to Mr Justice O'Higgins's order being varied so as to allow the Minister to appoint a new authorised officer on the grounds that it would be quite improper.

Mr Sanfey said matters had changed considerably since August 4th. Mr Maloney was no longer part of the proceedings and the Minister had a statutory discretion to appoint an authorised officer in certain circumstances and she had identified these circumstances to the Dunnes companies.

He said the Minister sought now to appoint Mr Ryan and accepted it would not be appropriate for him to take any steps in pursuance of his role pending an outcome of the proceedings before the court. His appointment would merely restore the position the parties were in prior to Mr Maloney's resignation.

Mr Justice Smith said it seemed to him if the proceedings were to continue that the Minister should be entitled to appoint another authorised officer. In varying Mr Justice O'Higgins's order, he ruled that the alteration should go no further than to permit the appointment of Mr Ryan.