Carway v Attorney General

• Jurisdiction: Ireland
• Judge: Miss Justice Carroll
• Judgment Date: 01 January 1997
• Neutral Citation: 1996 WJSC-HC 2888
• Court: High Court
• Docket Number: [1994] No. 225C
• Date: 01 January 1997

1996 WJSC-HC 2888

THE HIGH COURT

Record No. 1994 No. 225 COS

CARWAY v. AG

IN THE MATTER OF VERIT HOTEL AND LEISURE (IRELAND) LIMITED

(IN RECEIVERSHIP AND LIQUIDATION) AND

IN THE MATTER OF THE COMPANIES ACTS 1963 TO 1990

BETWEEN

JOHN CARWAY

PLAINTIFF

AND

THE ATTORNEY GENERAL

DEFENDANT

Citations:

COMPANIES ACT 1990 S150

COMPANIES ACT 1990 S150(3)

COMPANIES ACT 1990 S149(1)(b)

MAHER V AG 1973 IR 140

MCELDOWNEY, STATE V KELLEHER 1983 IR 289

MENTAL TREATMENT ACT 1945 S163(2)(b)

ROAD TRAFFIC (AMDT) ACT 1978 S23

MISUSE OF DRUGS ACT 1984 S10

EXTRADITION ACT 1960 S55

COMPANIES ACT 1963 S124

HOWARD V COMMISSIONER OF PUBLIC WORKS 1994 1 IR 101

HAUGHEY, IN RE 1971 IR 217

COMPANIES ACT 1963 S104

COMPANIES ACT 1983 S5(4)

COMPANIES ACT 1963 S18

ROAD TRAFFIC ACT 1968 S44(2)(a)

STREET & HOUSE TO HOUSE COLLECTIONS ACT 1962 S13(4)

COMPANIES ACT 1990 S149

COMPANIES ACT 19901990 PART VII CH 1

COMPANIES ACT 1963 S214

Synopsis:

COMPANY

Director

Companies - Involvement - Restrictions - Imposition - Court - Powers - Exercise - Enquiry into honesty and responsibility of director - Power of court to bar director from acting as such or as company secretary for five years - Breach of order a criminal offence - Enquiry authorised on liquidator's certificate that company insolvent - Whether certificate an encroachment upon judicial functions - Certificate not conclusive evidence - Valid enactment - (1994/225 Cos - Carroll J. - 3/7/96) - [1996] 3 IR 300 - [1997] 1 ILRM 110

|Carway v. The Attorney General|

CONSTITUTION

Statute

Validity - Justice - Administration - Judges - Function - Encroachment - Insolvent company - Enactment provided for court's enquiry into honesty and responsibility of directors - Power of court to bar director from acting as such or as company secretary for five years - Breach of order a criminal offence - Enquiry authorised on liquidator's certificate that company insolvent - Whether certificate an encroachment upon judicial functions - Certificate not conclusive evidence - Valid enactment - Companies Act, 1990 (No. 33), ss. 149, 150 - Constitution of Ireland, 1937, Article 34 - (1994/225 Cos - Carroll J. - 3/7/96) [1996] 3 IR 300 - [1997] 1 ILRM 110

|Carway v. The Attorney General|

EVIDENCE

Admissibility

Certificate - Conclusiveness - Enactment - Terms - Liquidator's certificate of insolvency of company - Certificate not expressed to be conclusive evidence - Enquiry authorised on liquidator's certificate that company insolvent - Whether certificate an encroachment upon judicial functions - Certificate not conclusive evidence - Valid enactment - (1994/225 Cos - Carroll J. - 3/7/96) - [1996] 3 IR 300 - [1997] 1 ILRM 110

|Carway v. The Attorney General|

1 Judgment of delivered on the 3rd day of July 1996 Miss Justice Carroll

2 By Notice of Motion in the liquidation returnable for the 16th January, 1995 Vincent Duignan who was appointed liquidator of the Verit Hotel and Leisure (Ireland) Limited on the 10th August, 1994 applied to the Court under Section 150 of the Companies Act, 1990for an Order declaring that John Carway, Stephen Carway and Elaine Carway, the respondents in the Motion, should not for a period of five years be appointed or act in any way, either directly or indirectly as a director or secretary or be concerned or take part in the promotion or formation of any company subject to the provisions of subsection (3) of Section 150 of the Companies Act, 1990.In bringing the application the liquidator relied on his own certificate as provided in Section 149(1)(b).

3 On the Respondents" application, Mr. Justice Murphy made an Order on the 20th November, 1995 directing a preliminary issue to be tried as to the constitutionality of Section 149(1)(b) of the Companies Act, 1990with John Carway as Plaintiff and the Attorney General as Defendant.

4 There is a single legal issue to be decided in relation to Section 149(1)(b) which provides:-

"This chapter applies to any company if—"

(a) at the commencement of its winding up it is proved to the Court, or

(b) at any time during the course of its winding up the liquidator of the company certifies or it is otherwise proved, to the Court that it is unable to pay its debts (within the meaning of Section 214 of the principal Act)".

5 The Plaintiff in the issue claims that no provision is made for disputing the correctness of the certificate which is given the status of evidence. Therefore, what is provided for is an irrebuttable presumption of insolvency contrary to the principles enunciated in Maher -v- The Attorney General ( 1973 IR 140)and The State (McEldowney) -v- Kelleher ( 1983 IR 289). Accordingly, the provision permitting the liquidator to certify that the company is unable to pay its debts is unconstitutional. The Plaintiff claims that because of the wording of Section 149(1)(b), he is precluded from disproving the liquidator's certificate as to insolvency. This is a justiciable issue which cannot be resolved by the liquidator and removed from the jurisdiction of the Courts.

6 The Plaintiff contends that the provision is not warranted because, (1) if the company is insolvent, the liquidator would have no difficulty in proving it, as he has books and records, (2) the directors who no longer have access to books and records would have difficulty in disproving insolvancy, (3) the company could be become solvent in the course of liquidation, (4) an Order under Section 150 would affect a person's ability to earn a livelihood, and lastly, breach of the provisions of Section 150 where the Order has been made, has criminal consequences.

7 Doctor Forde for the Plaintiff gave examples of many different statutes where the Oireachtas have provided for a certificate or other similar type of evidence to be admissible as proof until the contrary is shown. [Section 163(2)(b) of the Mental Treatment Act, 1945, Section 23 of the Road Traffic (Amendment) Act, 1978, Section 10 of the Misuse of Drugs Act, 1984, Section 55 of the Extradition Act, 1960, etc.]. The Companies Act, 1963, Section 124 provides that the register of members is to be prima facie evidence of certain matters. According to Dr. Forde's submission, it is impossible to conceive of the provision in Section 149(1)(b) as being other than an irrebuttable presumption without doing violence to the wording of the statute (see Howard -v- The Commissioners of Public Works 1994 1IR 101).

8 The...