There has been a lot of post- hoc rationalisation in the past few days about what was known, and what should have been known, when the terms of reference were being drawn up for the commission of investigation into Irish Bank Resolution Corporation.

Was the problem that emerged this week foreseeable? Did anyone in Government (and that’s where it matters) have an inkling that the sole member of the commission, Mr Justice Brian Cregan, would make a determination he had insufficient powers to introduce confidential documents in evidence?

The investigation stemmed from a dramatic disclosure made in the Dáil by Kildare North TD Catherine Murphy. She revealed the former Anglo Irish Bank had sold a company, Siteserv, to another company associated with Denis O'Brien, and that its value had been written down by €119 million.

When it was set up, the commission was asked to look at this transaction and 36 others where write-offs of €10 million or more were involved to see if they were “commercially sound”.

By its nature it would involve an examination of thousands of documents of a sensitive commercial nature for IBRC, the Department of Finance, the Central Bank and a lot of the bank's customers.

And from the outset it was understood that the issues of confidentiality and privilege would arise.

Indeed, Mr Justice Cregan pointed out in his 76-page determination yesterday that it did not involve one or two documents but the majority of the department's documents were in this "confidential" bracket and they went to the heart of the inquiry.

It is interesting to note the positions adopted by the three agencies. The IBRC directors argued the commission should still introduce them as evidence. The Department of Finance provided the information in an unredacted form (while stressing the majority of them were "confidential") and expressed no view as to whether or not the commission had power to use them. The legal advice conveyed by KPMG was that the commission did not have sufficient powers to introduce the confidential documents as evidence.

Mr Justice Cregan concluded the Act did not provide the chair with the powers of a High Court judge to decide if it was in the public interest for them to be used as evidence.

Should Attorney General Máire Whelan have foreseen this issue when advising on the terms of reference? There have been 13 previous commissions, most of which have dealt with confidential and privileged material, and this issue never arose.

In addition, all the Opposition leaders were invited to make submissions on the terms of reference and this particular issue was not flagged by any of them.

So in that sense, it is close to a Donald Rumsfeld "unknown unknown". However, the AG has already attracted some criticism for her dealing with the Fennelly commission issues, so is more prone to political attack on this issue.

The second major theme yesterday was the disclosure the Department of Finance had itself raised concerns in relation to confidentiality and privilege as far back as August. It has pointed out that it handed over all its documentation in unredacted form, but entered a caveat about confidentiality. That said, there is nothing in the documentation to contradict its position that it was for the judge to decide. In summary, it did not think it would be an issue.

So where can the Government go from here? It’s a tricky situation.

Some form of solution will have to be found. It won’t be a tribunal, rather a mechanism such as letting the High Court make a decision.