Cahill v Grimes

• Jurisdiction: Ireland
• Judge: MR. JUSTICE T.C. SMYTH
• Judgment Date: 20 July 2001
• Neutral Citation: [2001] IEHC 226
• Court: High Court
• Date: 20 July 2001

[2001] IEHC 226

THE HIGH COURT

DUBLIN

Record No: 86 Cos/1996

CAHILL (OFFICIAL LIQUIDATOR) v. GRIMES

IN THE MATTER OF THE COMPANIES ACTS 1963– 1990

and

IN THE MATTER OF CB READYMIX LIMITED (In Liquidation)

and

IN THE MATTER OF AN APPLICATION PURSUANT TO S.160 OF THE

COMPANIES ACT 1990

Between/

EDMOND P. CAHILL

(Official Liquidator)

Applicant

-and-

DR. MICHAEL GRIMES

Respondent

Citations:

COMPANIES ACT 1990 S160

COMPANIES ACT 1990 S160(2)(b)

COMPANIES ACT 1990 S160(2)(d)

COMPANIES ACT 1990 S160(4)(b)

COMPANIES ACT 1990 S159

COMPANIES ACT 1996 S266

COMPANIES ACT 1990 S150

COMPANIES ACT 1990 S160 CHAPTER 2

BUSINESS COMMUNICATIONS LTD V BAXTER UNREP MURPHY 21.7.95 1995/6/1869

LA MOSELLE CLOTHING LTD & ROSEGEM LTD V DJAVELL SOUALHI 1998 2 ILRM 345

LO-LINE MOTORS LTD, RE 1988 BCLC 689 2 AER 692

SEVENOAKS STATIONERS LTD, RE 1991 3 AER 578

DAWSON PRINT GROUP LTD, RE 1987 BCLC 601

BATH GLASS LTD, RE 1988 BCLC 329

Synopsis

COMPANY LAW

Liquidation

Duty of liquidators - Duty of care - Conduct of liquidator - Nature of revenue debt - Failure by liquidator to maintain records of company - Whether disqualification order should issue - Companies Act, 1990 sections 159, 160 (1996/86COS - Smyth J - 20/7/01)

Cahill v Grimes

The applicant brought a motion pursuant to section 160 of the Companies Act. 1990 seeking to have the respondent disqualified from acting as a liquidator. Mr. Justice Smyth was satisfied that the respondent had failed to act in an impartial manner, destroyed the books and records of the company and had failed to act in the interests of the creditors of the company and, in particular, of the Revenue. The respondent was unfit to be concerned with the management of a company. The respondent would be disqualified for seven years from being concerned in the management of a company as liquidator, receiver or examiner. In addition conditions were imposed on the respondent in relation to acting as an auditor, director or secretary of a company.

1 MR. JUSTICE T.C. SMYTH DELIVERED THE 20TH DAY OF JULY 2001

2 I hereby certify the following to be a true and accurate transcript of my shorthand notes of the evidence in the above-named action.

3 COPYRIGHT: Transcripts are the work of Gwen Malone Stenography Services and they must not be photocopied or reproduced in any manner or supplied or loaned by an appellant to a respondent or to any other party without written permission of Gwen Malone Stenography Services

MR. JUSTICE T.C. SMYTH DELIVERED JUDGMENT, AS FOLLOWS, ON FRIDAY, 20TH JULY 2001

MR. JUSTICE SMYTH:

4 This Motion concerns an application pursuant to Section 160 of the Companies Act, 1990. So far as is relevant to this application that section provides as follows:

"S. 160 (2) Where the court is satisfied in any proceedings or as a result of an application under this section that -"

5 (b) a person has been guilty, while a promoter, officer, auditor, receiver, liquidator of examiner of a company, of any breach of his duty as such promoter, officer, auditor, receiver, liquidatorof examiner; or

6 (d) the conduct of any person as promoter, officer, auditor, receiver, liquidator or examiner of a company, makes him unfit to be concerned in the management the court may of its own motion, or as a result of an application, make a disqualification order against such a person for such period as it sees fit.

7 (4) An appication under paragraph (b) or (d) subsection 2 may be made by -

8 (b) any member, contributory, officer, employee, receiver, liquidator, examiner or creditor of any company in relation to which the person who is the subject of the application —

9 (i) has been or is acting or is proposing to or being proposed to act as officer, auditor, receiver, liquidator or examiner, or

10 (ii) has been or is concerned or taking part, or is proposing to be concerned or take part, in the promotion, formulation of management of any company."(Emphasis added)

11 The definition of disqualification order is contained in Section 159 of the Act, 1909 and means:-

"An order under this part that the person against whom the order is made shall not be appointed or act as an auditor, director or other officer, receiver, liquidator or examiner or be in any way, whether directly or indirectly, concerned or take part in the promotion, formation or management of any company, or any society registered under the Industrial and Provident Societies Act, 1893 to 1978."

THE FACTS -

12 Cork Company Registrations, an enterprise owned and/or controlled by Dr. Grimes organised the formation of the company and sought and obtained a “tax number” for the company. The date of incorporation was 7th April 1988. The company was in the business of quarrying and selling sand and gravel. The company got into financial difficulties, in particular, in respect of returns and payments to the Revenue both in respect of PAYE and VAT. The Revenue commenced proceedings against the company by way of Summary Summons on 15th March 1995 seeking liberty to enter final judgment in the sum of £50,510.70. When the matter was eventually listed before the Master, the Revenue became aware that the company had been struck off the Register of Companies on 26th September 1995 for failure to furnish its annual returns to the Registrar of Companies. It would appear from Exhibit "EPC 4" of the 's affidavit herein that the company may have (did or purported to) transfer one of its main (if not its only real asset) assets, a quarry at Imokilly, Co. Cork which, by a transfer dated 1st July 1995, was purportedly transferred to Ladysbridge Investments of which the Respondent was the Secretary. The property is that referred to in Folio 893 Co. Cork. There of the four witnesses to the stated sealing of the transfer are all members of the Cronin family who were at some stage involved in or associated with the company.

13 On 15th January 1996 the company, whilst struck off the Register, purported to pass a resolution winding up the company and appointing the Respondent, Dr. Grimes, as Liquidator of the company.

14 On 25th March 1996 Barron J. ordered the restoration of the company to the Register and restrained the Respondent from acting as Liquidator until 22nd April 1996. On 27th March 1996 the Master of the High Court by Order granted the Revenue liberty to enter final judgment against the company in the sum of£50,510.70.

15 On 25th April 1996 the Applicant was appointed as Provisional Liquidator of the company by Order of Costello J. (on foot of the petition of the Revenue dated 18th April 1996).

16 On 29th April 1996 Barron J. ordered a stay on the appointment of the Applicant as Provisional Liquidator. 27th January 1997 Barron J. discharged the stay on the restraining of the Applicant from acting as Provisional Liquidator, declared the resolution winding up the company and appointing the Respondent as Liquidator of the company on 15th January 1996 to be invalid. It was further ordered that the stay on the entry of judgment on foot of the Master's Order dated 25th March 1996 continue until the hearing of the appeal to the Supreme Court. Other than the issue and services of the Notice of Appeal, the Respondent has taken no step to advance or prosecute the appeal, in the instant application before the Court, Counsel for the Applicant indicated that not only had no application been made by the Respondent to expedite the appeal, but notwithstanding the Order of Barron J. is now almost four and a half years on the court record, the books of appeal have not been lodged. The Respondent has sought to argue that the instant application is premature until the outcome of the appeal is known and available. I reject that submission as untenable having regard to the terms of Section 160 and the implied proposition that a person who fails to prosecute an appeal can use such failure to act in defeasance of another's right to invoke the provisions of Section 160 and the function of the Courts to adjudicate on an application under the section.

17 The Applicant has set out in great detail the several steps taken by him since his appointment as Provisional Liquidator, originally, and as the Official Liquidator of the company appointed by Kelly J. per Order dated 23rd June 1997. There were several other Court Orders (Shanley J., Moriarty J., Laffoy J., a hearing before McCracken J. and the Supreme Court) which are unnecessary of recitation.

18 The Respondent has sought to argue that other than being concerned with the formation of the company and obtaining its tax number, he has had no hand, act or part in the affairs of the company. On the one hand he sought to argue that once the resolution by which his appointment was declared invalid, he never did become a liquidator and, accordingly, never did have any obligations in that capacity. On the other hand, he has filed numerous documents in both the Supreme Court and the High Court in which he asserts that he was and is and believed/believes himself to be the liquidator of CB Readymix Limited (In Liquidation) including inter alia:-

19 1) Notice of Appeal No. 9604261 paragraph (3) dated 26th April 1996.

20 2) Notice of Appeal No. 96042621 paragraph (6) dated 28th March 1996.

21 3) Notice of Appeal No. 96042604 paragraph (6) dated 26th April 1996.

22 4) Affidavit sworn on 20th April 1996 paragraph (2) Ref. No. 96042102.

23 5) Affidavit sworn on 29th April 1996 paragraphs (2) and (39) Ref. No. 96042602.

24 6) Affidavit sworn on 29th April 1996 paragraph (2) Ref. No. 96042922.

25 I accept the submission of Mr. Shipsey S.C. for the Applicant that the Respondent is estopped by court record from denying that he believed himself to be and held himself out as liquidator of the company. Furthermore, the record of the several meetings and events deposed to by the Applicant and set out in Exhibit...