The Tanaiste will appeal the decision of the High Court yesterday to quash the appointment by her of an authorised officer to Dunnes Stores.

In his judgment in favour of Ms Margaret Heffernan and two Dunnes Companies, Mr Justice Butler said Ms Harney's appointment of the officer to two Dunnes companies was "unreasonable and irrational" in that it "plainly and unambiguously flies in the face of fundamental reason and common sense".

Mr Harney was "surprised and disappointed" by the decision, but glad Mr Justice Butler had found she had "acted in good faith" in making the appointment.

She was also glad he had rejected allegations that leaks to the media concerning Dunnes companies came from her or anyone in her Department.

"Based on legal advice I have decided to appeal the decision to the Supreme Court. The necessary papers are now being prepared, and they will be lodged with the court as soon as possible," she said.

The legal dispute between the Tanaiste and Dunnes Stores, one of the largest privately owned companies in the State, has been going on for more than two years.

In July 1998 Ms Harney told Ms Heffernan, the managing director of Dunnes Stores, that she was appointing an authorised officer to Dunnes Stores Ireland Company and Dunnes Stores (Ilac Centre) Ltd.

Ms Heffernan sought a judicial review of the decision and the matter has since been the subject of three High Court hearings and one Supreme Court hearing. The legal costs to date are believed to exceed £100,000 (€127,064) and have been awarded against the State.

Yesterday's decision represents a blow to Ms Harney's vigorous campaign of inquiry into the allegations of financial wrongdoing that emerged from the McCracken Tribunal and elsewhere.

Ms Harney has said that "shocking revelations" will emerge from some of these inquiries, and the Progressive Democrats have been looking to the disclosure of these revelations to position themselves again at the head of the campaign against sleaze in politics.

The decision also represents the second recent judicial setback for the Tanaiste. The decision of Mr Justice Haugh to postpone indefinitely the trial of Mr Charles Haughey on charges of obstructing the McCracken Tribunal is being appealed. Comments made by Ms Harney were cited by the judge as one reason why Mr Haughey could not get a fair trial at present.

Labour Party president Mr Proinsias de Rossa warned that yesterday's court decision could have implications for other inquiries initiated by Ms Harney, though sources in her Department rejected this.

Mr de Rossa warned of possible "serious implications" for the prospects of the results of the various inquiries initiated by Ms Harney in recent years becoming public.

"Just two months ago Ms Harney spoke of the `shocking revelations' that have passed over her desk. Since she took office Mary Harney has initiated 16 separate inquiries under the Companies Act, some as far back as 1997. The public has yet to hear the full results of a single one. It is now time that the Tanaiste started to deliver on her promises," he said.

Most inquiries initiated by Ms Harney arose out of the findings of the 1997 McCracken Tribunal.

Initially Ms Harney did not appoint an authorised officer to Dunnes as she had an understanding the company would co-operate on a voluntary basis with inquiries. But although some documents were supplied, it was decided to appoint an authorised officer to the two Dunnes companies in July 1998.

Dunnes later said the appointment came "out of the blue", was motivated by "fiscal prurience", and constituted "harassment".

But argument was made for Ms Harney that revelations concerning further payments by Mr Ben Dunne to Mr Haughey, other than those discovered by the McCracken Tribunal, had provoked the decision, as had delays in the issuing of auditors' certificates for Dunnes companies in the period from 1990 to 1998. Mr Dunne resigned from executive positions in the Dunnes group in 1993.