Crumb Rubber Ireland Ltd ((in Liquidation)) v The Companies Act 2014

• Jurisdiction: Ireland
• Judge: Mr. Justice Brian O'Moore
• Judgment Date: 17 July 2020
• Neutral Citation: [2020] IEHC 348
• Docket Number: [2019/246 COS]
• Court: High Court
• Date: 17 July 2020

BETWEEN

CRUMB RUBBER IRELAND LIMITED (IN LIQUIDATION)

APPLICANT

AND

THE COMPANIES ACT 2014

RESPONDENT

[2020] IEHC 348

Brian O'Moore J.

[2019/246 COS]

THE HIGH COURT

Leave to issue proceedings – Companies Act 2014 s. 678 – Waste Management Act 1996 – Applicant seeking an order for leave to issue proceedings – Whether the reliefs sought by the applicant are of a mandatory nature which are outside the scope of the liquidator’s powers under s. 677 of the Companies Act 2014

Facts: The applicant, Mr Morgan, applied to the High Court seeking an order pursuant to s. 678 of the Companies Act 2014 for leave to issue proceedings against Crumb Rubber Ireland Limited (In Liquidation) (Crumb). The proceedings to be brought against Crumb were taken under s. 57 and/or 58 of the Waste Management Act 1996, as amended. The proceedings arose from the leasing of property to Crumb by Mr Morgan; Crumb went into liquidation in May 2017, and by Deed of Surrender of the 27th of June 2017 the liquidator (Mr Murray) surrendered the property to Mr Morgan. However, Mr Morgan claimed that the property was at the time of surrender contaminated and an environmental hazard, and sought to have that situation put to rights. Crumb put forward three reasons why the order should not be granted: “(a) First, most of the reliefs sought by the Applicant in the substantive proceedings (hereinafter, “the proceedings”) are of a mandatory nature which are outside the scope of the liquidator’s powers under section 677 of the 2014 Act; (b) Secondly, insofar as the reliefs sought against the Applicant can be refined solely to monetary reliefs, the Company does not have sufficient assets to meet any part of the Applicants claim; and (c) Finally, by virtue of the Deed of Surrender made on 27 June 2017, the Applicant has already released the Company from any obligations or liabilities arising from its lease of the Site and, as such, the Proceedings as against the Company are doomed to fail.”

Held by O’Moore J that he had taken into account the following factors: (1) the Deed of Surrender – this was not a factor which should weigh against granting the order sought; (2) the effect that funding the defence of the claim would have on the preferential creditors of Crumb – this was certainly a factor which suggested that the order should not be granted, and no submission to the contrary was made; (3) the inappropriateness of the mandatory orders sought against Crumb in the main proceedings – while not in itself by any means determinative, this consideration also suggested that leave should be refused; (4) the absence of any assets or insurance on the part of Crumb which would allow it to comply with any of the orders sought in the main proceedings, should Mr Morgan succeed in obtaining such reliefs – this very important factor suggested strongly that there was no useful purpose to be served in allowing the case against Crumb to go forward; (5) the absence of any prejudice to Mr Morgan (caused by refusing the order) in the case that he made against the other respondents in the main action – on considering the arguments made by Mr Morgan and the response by Crumb, it was clear that no such prejudice arose.

O’Moore J held that the application should be refused applying the principles set out at pages 923 and 924 of The Companies Act 2014 by Conroy (2018 Edition). O’Moore J held that it was preferable that Mr Murray swear an affidavit confirming the contents of his solicitors’ correspondence upon which O’Moore J had relied in deciding that no insurance cover existed relevant to the claims made against Crumb in the main proceedings. O’Moore J held that this affidavit was to be sworn and served within one week of delivery of this judgment. If Mr Murray was not willing to swear such an affidavit, O’Moore J would reconsider his view about the application for relief under s. 678. O’Moore J would put this in for 10 am on the 28th of July 2020 in order to finalise matters.

Application refused.

JUDGMENT of Mr. Justice Brian O'Moore delivered on the 17th day of July, 2020.

1 The Applicant (Mr. Morgan) seeks an Order pursuant to section 678 of the Companies Act 2014 for leave to issue proceedings against Crumb Rubber Ireland Limited (In Liquidation), which I will refer to as “Crumb”.

2 The proceedings to be brought against Crumb are taken under section 57 and/or 58 of the Waste Management Act 1996, as amended. The reliefs sought against Crumb are also sought against others, including former directors of Crumb. The full range of Orders to be sought in the main proceedings read as follows:-

“1. Orders against the Respondents, or each or either of them, their respective servants or agents, pursuant to sections 57 and/or 58 of the Waste Management Act, 1996 as amended (hereinafter referred to as ‘the 1996 Act’) to the following effect:

(a) That they forthwith or within such period as may be fixed by this Honourable Court, take and/or pay for any measures (including but not limited to extraction, transport and disposal of any remaining waste) identified by Herr Engineering and Design Limited in its reports dated 14 April 2016 and 20 October 2016, subject to the removal by AES, Bord Na Mona in or around 2018 of 91.66t of tyres, 71.22t of tyres, 141t of 10 - 19mm equifill, 8.2t of carpetfill and fibre and otherwise to mitigate and/or remedy the effects of the deposit of any waste material at lands at Mooretown, Dromiskin, Co. Louth (hereinafter referred to as ‘the Site’) and to ensure it is left in a condition whereby it is not causing or likely to cause environmental pollution. Such measures to be carried out within such period as specified by Herr Engineering and Design Limited in its remediation proposal or in default of such agreement such period as the court may specify and/or deem appropriate.

(b) That they arrange for the removal of waste held at the Site by authorised waste collection permit holders only and prior to the transfer of the waste to submit to the Applicant the Reference Numbers of the Waste Collections Permits held by all waste collection permit holders involved in the transfer of waste from the Site.

(c) That they submit to the Applicant receipts/disposal certificates in respect of all waste transferred from the said facility within two days of such transfer.

(d) That they discharge all costs incurred by the Applicant associated with the removal and disposal of waste from the Site and to discharge any further costs incurred in the removal and disposal of the aforesaid waste.

(e) That they carry out no further waste activities on the Site and/or at any other unauthorised waste facility in their ownership, occupation and/or control in circumstances where waste is currently being, or has been, held and/or recovered and/or disposed of on the Site in a manner that is causing and/or is likely to cause environmental pollution and/or is in contravention of sections 34(1) and/or 39(1) of the 1996 Act.

(f) That the Respondents cease and/or refrain from holding, recovering, disposing or receiving waste of any kind at any waste facility in their ownership, occupation and/or control, other than in strict compliance with any Waste Collection Permit or Waste Facility Permit validly issued from the relevant Authority.

2. Such interim and/or interlocutory relief as may appear to be just and/or appropriate to this Honourable Court pursuant to sections 57 and 58 of the 1996 Act.

3. Such further or other relief as to this Honourable Court deems meet;

4. Costs of the Proceedings.

5. Liberty to apply.”

3 Put in very general terms, the proceedings arise from the leasing of property to Crumb by Mr. Morgan; Crumb went into liquidation in May 2017, and by Deed of Surrender of the 27th of June 2017 the liquidator (Mr. Murray) surrendered the property to Mr. Morgan. However, Mr. Morgan claims that the property was at the time of surrender contaminated and an environmental hazard, and seeks to have that situation put to rights.

4 The parties agreed at the hearing of this motion that the relevant legal principles governing the grant of an Order under section 678 are set out at pages 923 and 924 of The Companies Act 2014 by Conroy (2018 Edition) in these terms:-

“Criteria to be used in determining whether to grant leave: The court has a broad discretion in relation to an application under this section and is required to do what is right and fair in the circumstances: Wright-Morris v. IBRC Ltd. [2014] 3 I.R. 468; Re Aro Co. Ltd. [1980] Ch 196. Leave should generally be refused where the issues in the proceedings can be conveniently decided in the winding up ( Re Exchange Securities Ltd. [1983] B.C.L.C. 186) or where the proceedings are clearly statute-barred: Wright-Morris v. IBRC Ltd. [2014] 3 I.R. 468. It is appropriate to grant leave in respect of civil proceedings even where there are no funds to meet the claim, if there may be an insurer against whom the plaintiff wishes to proceed pursuant to s.62 of the Civil Liability Act 1961 or if there are multiple defendants and the plaintiff wishes to avoid adverse consequences pursuant to s.35(1)(i) of the Civil Liability Act 1961: Re MJBCH Ltd. [2013] 1 I.R. 407. In Re Hibernian Therapeutics Global Ltd. [2014] IEHC 141, Finlay Geoghegan J. granted leave to continue a counterclaim against a company on a number of grounds, including: that it involved complex issues which could be conveniently determined in the winding up; that the counterclaim plaintiffs claimed that success in the proceedings would provide a benefit to them in defending separate proceedings in the USA; and that no application had been brought to strike-out the counterclaim.”

5 Crumb puts forward three reasons why the Order should not be granted:-

“(a) First, most of the reliefs sought by the Applicant in the substantive proceedings (hereinafter, “the proceedings”) are of a mandatory nature which are outside...