Congil Construction Limited (In Liquidation) -v- Kitt & ors, [2018] IEHC 247 (2018)

Docket Number:2015 No. 352 P
Party Name:Congil Construction Limited (In Liquidation), Kitt & ors
 
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THE HIGH COURT[RECORD NO. 2015/352 P.]

BETWEEN

CONGIL CONSTRUCTION LTD (IN LIQUIDATION)PLAINTIFFAND

PROINSIAS KITT, ROBERT CLINTON, TERENCE NOONE, STEPHEN CROWLEY AND MARK GIBBS, PRACTICING UNDER THE STYLE AND TITLE OF DHKN ACCOUNTANTS AND DHKN LIMITEDDEFENDANTSJUDGMENT of Mr. Justice Coffey delivered on the 8th day of May, 2018

  1. This is the defendant’s application for an order pursuant to O 8, r. 2 of the Rules of the Superior Courts setting aside an order of this Court (Humphreys J.) extending the time to apply for a renewal of the plenary summons, issued by the plaintiff on the 19th January, 2014 and renewing the said summons for a period of six months.

    Factual summary

  2. On the 26th April, 2010, Declan Mannion, chartered accountant, was appointed as the official Liquidator (“the Liquidator”) of the plaintiff company by the High Court, prior to which the company had been involved in the construction industry. It is common case that the defendants acted as auditors and that they had provided financial and taxation advices to the company between March 2004 and the 26th April, 2010. The defendants deny the assertions of the Liquidator that they also provided a monthly bookkeeping service to the company or that it completed VAT returns or PAYE/PRSI returns for the company.

  3. In his affidavit before Humphreys J., the Liquidator made two complaints against the defendants, however, he has since clarified, through his counsel, that these proceedings relate solely to the second complaint. The complaints are as follows:-

    (i) he alleges that the defendants failed in their duty to the company in verifying the audited accounts of the company for the years ending 30th April, 2008 and 2009 by reason of the fact that the said accounts purported to assign a very significant value to its work in progress when in fact the relevant unfinished projects had no value;

    (ii) he alleges that the defendants were further negligent in permitting VAT and other tax irregularities to occur during the same period which has resulted in a loss to Revenue of approximately €2 million, being the damages that are now being claimed in these proceedings.

  4. The Liquidator issued two sets of proceedings on foot of these complaints:-

    (i) on the 27th April, 2014 the Liquidator obtained leave from the High Court (Finlay Geohegan J.), pursuant to s. 231 of the Companies Act 1963, to issue but not serve a plenary summons against the defendants relating to the allegation made in respect of the overvaluation of the company’s work in progress;

    (ii) on the 19th January, 2015 the Liquidator obtained leave from the High Court (Baker J.), pursuant to s. 231 of the Companies Act 1963, to issue but not serve a plenary summons against the defendants in respect of the allegation of VAT irregularity.

  5. The application before this Court relates only to the second set of proceedings. Prior to seeking leave to issue the second set of proceedings, the Liquidator informed the High Court (Finlay Geoghegan J.) on the 7th April, 2014 that he was in effect abandoning the first set of proceedings. Counsel for the Liquidator made the court aware of this when leave was sought to issue the second set of proceedings on the 19th January, 2015.

  6. Prior to making the application on the 19th January, 2015, the Liquidator was advised that he had until the 27th February, 2014 to institute these proceedings by reason of the fact that the application would soon be outside of the time allowed for the making of such an application in circumstances where the allegations concerned accounts that had been signed off on by the defendants on the 28th February, 2008.

  7. As time was of the essence, the Liquidator applied to the High Court on the 19th January, 2015 for leave to issue but not serve a plenary summons against the defendants notwithstanding that a supporting expert report from an accountant was not available. The High Court adjourned the issue of service of the proceedings until such time as the requisite expert accountancy report and a favourable opinion from counsel could be properly put before the court.

  8. On the 14th December, 2015 the expert accountancy report and counsel’s opinion were put before the court in a short affidavit, as a result of which the High Court (Keane J.) made an order granting leave to the Liquidator to serve the plenary summons on the defendants.

  9. As of the date of the making of the order, the 14th December, 2015, the Liquidator had until the18th January, 2016 to serve the summons before it lapsed by virtue of O. 8 r. 1 of the Rules of the Superior Courts.

  10. Against this background, the Liquidator has deposed to the following salient facts:-

    (i) that the proceedings to which the plenary summons relate are the only valuable asset in the liquidation;

    (ii) that he was aware at all material times between the 14th December, 2015 and the 18th January, 2016 of the need to ensure that the summons was served on the defendants before it expired;

    (iii) that on the...

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