Adalbert Ltd v Companies Act 2014
| Jurisdiction | Ireland |
| Judge | Mr. Justice Quinn |
| Judgment Date | 23 April 2020 |
| Neutral Citation | [2020] IEHC 194 |
| Docket Number | Record No. 2019/180 COS |
| Court | High Court |
| Date | 23 April 2020 |
IN THE MATTER OF ADALBERT LIMITED (IN LIQUIDATION) AND IN THE MATTER OF SECTION 819 OF THE COMPANIES ACT 2014
[2020] IEHC 194
Quinn J.
Record No. 2019/180 COS
THE HIGH COURT
Companies – Declaratory relief – Companies Act 2014 s. 819 – Applicant seeking a declaration pursuant to s. 819 of the Companies Act 2014 – Whether the respondent had demonstrated that he acted responsibly in relation to the conduct of the affairs of a company
Facts: The applicant, Mr Murphy, applied to the High Court seeking a declaration that the respondent, Mr Heagney, being a person to whom Chapter 3 Part 14 of the Companies Act 2014 applies, shall not for a period of five years be appointed or act in any way, whether directly or indirectly as a director or secretary of a company or be concerned to take part in the formation or promotion of a company unless that company meets the requirements set out in s. 819 (3) of the 2014 Act. This application was grounded on an affidavit of the applicant sworn 14 May, 2019. The respondent delivered a replying affidavit on 8 November, 2019, and two further affidavits were exchanged between the parties namely a second affidavit of the applicant on 8 January, 2020, and a second affidavit of the respondent sworn on 17 February, 2020. On 18 June, 2018, the applicant was appointed liquidator of Adalbert Ltd (the Company) by order of the High Court on foot of a petition presented by the Collector General of the Revenue Commissioners. The respondent was appointed a director of the Company on 23 September, 2016. The trade of the Company was the operation of a coffee shop from a premises known as No. 1 at Howth Market, Harbour Road, Howth, County Dublin. This appeared to have been a semi-permanent stall at the meeting point of Harbour Road, Howth and Howth Pier. The applicant submitted that the respondent had not demonstrated that he acted responsibly in relation to the conduct of the affairs of the Company or that when requested to do so by the liquidator he co-operated as far as could reasonably be expected in relation to the conduct of the winding up of the Company.
Held by Quinn J that the respondent: (a) failed to comply with his obligation to make a satisfactory statement of affairs; (b) failed to cause financial statements to be completed and returned for any period of the Company’s existence; (c) failed to file returns to Revenue; (d) failed to maintain proper books and records of the affairs of the Company; (e) failed to take steps to implement a winding up of the Company for a period of at least a year after it had become insolvent; and (f) failed to co-operate with the liquidator as far as could reasonably be expected in relation to the conduct of the winding up. Having taken all of these matters into account, Quinn J was not persuaded that the respondent had acted responsibly in relation to the affairs of the Company or that he had, when requested to do so by the applicant, co-operated as far as could reasonably be expected in relation to the conduct of the winding up of the Company.
Quinn J held that he would make a declaration pursuant to s. 819 of the 2014 Act that the respondent shall not for a period of five years be appointed to act in any way directly or indirectly as a director or secretary of a company or be concerned in or take part in the formation or promotion of a company unless that company meet the requirement set out in s. 819 (3).
Declaration granted.
In these proceedings the applicant seeks a declaration that the respondent, being a person to whom Chapter 3 Part 14 of the Companies Act 2014 applies, shall not for a period of five years be appointed or act in any way, whether directly or indirectly as a director or secretary of a company or be concerned to take part in the formation or promotion of a company unless that company meets the requirements set out in subsection 3 of section 819 of the Companies Act 2014.
On 18 June, 2018, the applicant was appointed liquidator of the Company by order of the High Court on foot of a petition presented by the Collector General of the Revenue Commissioners.
This application is grounded on an affidavit of the applicant sworn 14 May, 2019. The respondent delivered a replying affidavit on 8 November, 2019, and two further affidavits were exchanged between the parties namely a second affidavit of the applicant on 8 January, 2020, and a second affidavit of the respondent sworn on 17 February, 2020.
The trade of the Company was the operation of a coffee shop from a premises known as No. 1 at Howth Market, Harbour Road, Howth, County Dublin. This appears to have been a semi-permanent stall at the meeting point of Harbour Road, Howth and Howth Pier.
In the spectrum of gravity of cases to come before this Court pursuant to s.819 of the 2014 Act this case is at the lower end, in terms both of the scale of the Company's trade and its indebtedness, and in terms of the conduct of the sole director. Nonetheless I have come to the conclusion that the respondent has not demonstrated that he acted responsibly in relation to the conduct of the affairs of the Company or that when requested to do so by the liquidator he co-operated as far as could reasonably be expected in relation to the conduct of the winding up of the Company. Therefore, I shall make a declaration pursuant to s.819(1) of the Act.
I shall firstly outline the history of the Company and then consider the matters which the applicant has identified as being of concern in his assessment of the respondent's conduct, and consider the responses made by the respondent in respect of these issues.
The Company was incorporated on 23 April, 2014. There is some dispute as to when the precisely it commenced trading. It ceased trading in May 2017 in the circumstances referred to below.
The respondent was at no time a shareholder in the company. He said that the business operated by the Company was owned by his former girlfriend, Olivia Marjoram. Ms. Marjoram was a director of the Company from its incorporation on 23 April, 2014, to 19 December, 2014. The respondent was appointed a director on 23 September, 2016. During the intervening period, two other persons namely a Conor Fogarty and a Tommy Martin were directors. Mr. Martin resigned on 19 November, 2015. Mr. Fogarty resigned on 23 September, 2016, when the respondent was appointed a director.
There is significant lack of clarity as to the precise nature of the Company's interest in the premises from which it traded. This is important because the respondent says that the sudden repossession of the property was the cause of the insolvency.
The Company occupied the premises pursuant to a lease granted by the landlord, Mr. Gregory Rickard. The applicant has exhibited two versions of the lease, one provided to him by the respondent and one provided to him by Mr. Rickard.
The version provided to the applicant by Mr. Rickard shows the tenant to be the respondent, described as “Darragh Heagney t/a …”. This lease is undated, but expressed to be for a term of three years from “July 2013”. The rent payable was €15,000 per annum to be paid by monthly standing order. This version of the lease is not signed by Mr. Rickard. It is signed by the respondent as tenant. It also has appended to it an executed form of Guarantee, also signed by the respondent as the guarantor.
The second version of the lease, being the one produced by the respondent, is dated 18 October 2013. It shows the tenant to be “Darragh Heagney, 48, St. Peters Terrace, Howth, Dublin 14”. On this version of the lease the term is clearly stated to be for a three year period from 1 September, 2013. This version has been signed by Mr. Rickard and by the respondent as tenant. Immediately beside the respondent's signature there has been inserted the word “promoter” although apparently not in the handwriting of the respondent.
The respondent says that in 2012 Ms. Marjoram wanted to open a cake and coffee shop in Howth, having expertise and experience as a pastry chef. The respondent said that he had no direct interest in such a business. He had lived all his life in Howth and he was well placed to know if a suitable premises might become available. At some time during 2013 he became aware of the availability of this premises and in October 2013 he signed the lease, thereby securing one of the units at Howth Pier he says for the benefit of Ms. Marjoram.
The Company was not incorporated until 23 April, 2014, so the Company itself was not the contracted tenant. No suggestion has been made that any corporate act was subsequently taken by the Company to formally ratify a tenancy or lease.
It is common case that from a time shortly after the incorporation of the Company it conducted the business previously conducted by Ms. Marjoram from the premises, until the landlord re-entered the property in May 2017.
The three-year term of the lease expired on 31 August, 2016. The respondent said that after he was appointed a director on 23 September, 2016, following the resignation of Mr. Fogarty, he, the respondent, then for the first time took over the running of the business. He said that he immediately opened negotiations with the landlord seeking an extension or renewal of the lease. He says that these efforts were ultimately unsuccessful and in May 2017 the landlord effected a re-entry of the premises and thereupon the business and trade of the Company ceased.
The respondent says that up to the day when the landlord re-entered the premises, the Company had been trading well. He exhibited an excel sheet which he said recorded the trading receipts and payments for the full year 2016....
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