Congil Construction Ltd ((in Liquidation)) v Kitt
| Jurisdiction | Ireland |
| Judge | Mr. Justice Coffey |
| Judgment Date | 08 May 2018 |
| Neutral Citation | [2018] IEHC 247 |
| Docket Number | [RECORD NO. 2015/352 P.] |
| Court | High Court |
| Date | 08 May 2018 |
AND
AND
[2018] IEHC 247
[RECORD NO. 2015/352 P.]
THE HIGH COURT
Company – O 8, r. 2 of the Rules of the Superior Courts – Renewal of summons – Sufficient reason
Facts: The defendants sought an order pursuant to o 8, r. 2 of the Rules of the Superior Courts for setting aside an order of the High Court for an extension of time to apply for a renewal of the plenary summons issued by the plaintiff and renewing the said summons for a period of six months. The liquidator contended that the proceedings to which the plenary summons related were the only valuable asset in the liquidation. The plaintiff contended that it had obtained leave to serve the summons from the High Court and the failure to serve the summons was due to the fault of the solicitor.
Mr. Justice Coffey set aside the order of the High Court for an extension of time to apply for the renewal of the plenary summons. The Court held that there was no 'good reason' to renew the summons. The Court observed that there was no impediment to serving the summons on the defendants during the relevant period.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 14th January, 2016 he made contact with his then solicitor who confirmed that he 'would be' serving the summons;
(iv) that on the 19th January, 2016 he again contacted his then solicitor who confirmed to him that he 'had served' a copy of the summons on one of the defendants, Mark Gibbs, who indicated that he was accepting service on behalf of the defendants;
(v) that by letter dated the 20th January, 2016, his then solicitor wrote to him confirming he had served the summons on the 19th January, 2016;
(vi) that at no stage between January 2016 and January 2017 was he aware of the fact that the summons had been served one day late;
(vii) that in March and April 2017, he had discussions with his new solicitor and counsel and his original counsel with a view to progressing matters. It was decided that a renewal application should be made to the High Court following which an application was made to Humphreys J. on the 26th June, 2017.
Order 8, rule 1 of the Rules of the Superior Courts provides as follows: -
'1. No original summons shall be in force for more than twelve months from the day of the date thereof, including the day of such date; but if any defendant therein named shall not have been served therewith, the plaintiff may apply before the expiration of twelve months to the Master for leave to renew the summons. After the expiration of twelve months, an application to extend time for leave to renew the summons shall be made to the Court. The Court or the Master, as the case may be, if satisfied that reasonable efforts have been made to serve such defendant, or for other good reason, may order that the original or concurrent summons be renewed for six months from the date of such renewal inclusive, and so from time to time during the currency of the renewed summons...'
Order 8 r. 1 of the Rules of the Superior Courts provides that if a summons is not served within twelve months from the date of its issue then it ceases to remain in force. A plaintiff may apply to the Master of the High Court before the expiration of twelve months for leave to renew the summons. After the expiry of twelve months, an application can be made to the High Court both for an extension of time for leave to renew the summons and for an order that the summons be renewed for six months from the date of such renewal.
It is clear from the wording of O. 8, r. 1 that a summons can only be renewed in such circumstances if the court is satisfied that either 'reasonable efforts' have been made to serve the defendant or that 'other good reason' exists to justify the renewal.
Order 8, r. 2 provides that where a summons has been renewed on an ex parte application, any defendant shall be at liberty before entering an appearance to serve a notice of motion to set aside such order.
The application under O. 8, r. 2 is in the nature of a hearing de novo and allows a defendant, even without adducing evidence of new facts, to submit that on the facts before the judge hearing the ex parte...
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