Corran Construction Company v Bank of Ireland Finance Ltd

• Jurisdiction: Ireland
• Judge: MR JUSTICE McWILLIAM
• Judgment Date: 01 January 1977
• Neutral Citation: 1975 WJSC-HC 417
• Date: 01 January 1977
• Docket Number: No. 118 SP/1976
• Court: High Court

1975 WJSC-HC 417

No. 118 SP/1976

CORRAN CONSTRUCTION LTD v. BANK OF IRELAND FINANCE LTD

CORRAN CONSTRUCTION COMPANY LIMITED

v.

BANK OF IRELAND FINANCE LIMITED

MR JUSTICE McWILLIAM

1 DELIVERED. the 8th DAY OF SEPTEMBER 1976 .

2 The Plaintiff being in liquidation, this claim is brought at the instigation of the Liquidator who claims a declaration that a charge created by the Plaintiff, hereinafter referred to as the Company, in favour of the Defendant on the 9th day of October, 1975, is void as a fraudulent preference of the Defendant within the meaning of Section 286 of the Companies Act, 1963.

3 In so far as relevant to this case, Section 286 of the 1963 Act provides that any mortgage relating to property made by a company within six months of its winding-up which, had it been made or done by an individual within six months before the presentation of a bankruptcy petition on which he is adjudged a bankrupt, would be deemed in his bankruptcy a fraudulent preference, shall in the event of the company being wound up be deemed a fraudulent preference of its creditors and be invalid accordingly.

4 In so far as relevant to this case, Section 53 of the Bankruptcy (Ireland) Amendment Act, 1872, provides that any charge on property made by any person unable to pay his debts as they become due from his own moneys in favour of a creditor, with a view to giving such creditor a preference over the other creditors, shall if the person making the same becomes bankrupt within three months after the date of making the same be deemed fraudulent and void as against the assignees of such bankrupt appointed under the Act.

5 The history of the Company was short and unsatisfactory. Mr. William O'Neill was a building sub-contractor who, in 1973, decided to try to purchase a licensed premises known as the Dick Turpin Bar at Blackpool, Cork, Mr. Gerard Coakley was also interested in acquiring these premises and, in the event, the two men decided to join forces and the Company was formed on 15th May, 1974 under the name of Coakley & O'Neill Ltd. Messrs. Coakley and O'Neill were at all times the sole directors and members of the Company. Although the Company had already been formed, the two directors applied for a loan for the purchase of the premises in their own names. A loan to them was authorised by the Defendant by letter of 23rd October, 1974, and the title deeds were deposited with the Defendant on 15th November, 1974. Before the loan was made, the Defendant became aware of the formation of the Company and, on 9th December, 1974, a fresh deposit appears to have been made on behalf of the Company and the sum of £13,500 was advanced to the Company. The creation of this charge was not registered pursuant to the provisions of Section 99 of the Act of 1963. This charge was therefore void. Extensions and renovations appear to have been done to the premises by Mr. O'Neill who was in charge of this and the other building interests of the Company while Mr. Coakley was in charge of the licensed...