David Van Dessel v Christopher Gill and Another

• Jurisdiction: Ireland
• Judge: Mr. Justice Barrett
• Judgment Date: 30 May 2014
• Neutral Citation: [2014] IEHC 317
• Court: High Court
• Docket Number: [No. 158 COS/2012]
• Date: 30 May 2014

[2014] IEHC 317

THE HIGH COURT

[No. 158 COS/2012]

Van Dessel v Gill

IN THE MATTER OF ACCESS CLEANING SERVICES LIMITED (IN LIQUIDATION)

AND IN THE MATTER OF THE COMPANIES ACTS, 1963 TO 2009

AND IN THE MATTER OF SECTION 150 OF THE COMPANIES ACT, 1990

AND SECTION 56 OF THE COMPANY LAW ENFORCEMENT ACT, 2001

BETWEEN

DAVID VAN DESSEL

APPLICANT

AND

CHRISTOPHER GILL AND MARTIN GILL

RESPONDENTS

COMPANIES ACT S150

COMPANIES ACT S150(2)

LA MOSELLE CLOTHING LTD & ROSEGEM LTD v SOUALHI 1998 2 ILRM 345 1998/23/8886 1998 IEHC 66

SQUASH (IRL) LTD, IN RE 2001 3 IR 35 2001/23/6280 2001 IESC 200

KAVANAGH v DELANEY & ORS (TRALEE BEEF & LAMB LTD, IN RE) 2005 1 ILRM 34 2004/24/5615 2004 IEHC 139

MITEK HOLDINGS LTD, IN RE; GRACE (LIQUIDATOR) v KACHKAR & MCCELLAN CARRIGAN 2010 3 IR 374 2010/36/9110 2010 IESC 31

DUIGNAN v CARWAY UNREP MCCRACKEN 23.1.2002 2002/7/1596 2002 IEHC 1

KAVANAGH v CUMMIN & ORS (DIGITAL CHANNEL PARTNERS LTD, IN RE) 2004 2 ILRM 35 2004/24/5602

COMPANY LAW ENFORCEMENT ACT 2001 S56(2)

COYLE v O'BRIEN & HILL & HUGHES 2003 2 IR 627 2003/10/2087

Company – Insolvency – Director Liability – Tax Liability – Application for restriction Order – Companies Act 1990,sec.150 – Honesty and Responsibility of Director Conduct – Revenue Commissioner

The facts of this case arise out of the gradual liquidation of a company and the conduct of its former directors. The respondents in this case, Christopher Gill and Mr. Martin Gill, are former directors of Access Cleaning, a company that provided industrial cleaning services. The directors are alleged to have financed the day to day operations of the company by the arrears of taxes owing to the Revenue Commissioner. As a consequence of this incurred revenue debt an application was made before Barrett J. in the High Court, for a restriction order under s.150 of the Companies Act 1990. In deciding whether it is appropriate to grant such an order Barrett J was required to examine the honestly and responsibly in relation to the conduct of the affairs of Access Cleaning and whether there is no other reason why it would be just and equitable that either of them should be the subject of an order made under s.150.

Considering the grounds for when a restriction order under s.150 should be appropriately applied Barrett used case law guidance offered in La Moselle Clothing Limited (in liquidation) v. Soualhi [1998] 2 I.L.R.M. 345and Re Mitek Holdings Limited [2010] 3 I.R. 374. Deciding on whether the director”s actions were honest and responsible and whether it would be just and equitable to initiate an order, Barrett found that there were no “just and equitable” grounds arising in this case. Furthermore Barrett stated that In deciding whether either or both of directors had acted responsibly the court may of course have regard to their respective obligations as directors, to general commercial practice and to prior case-law but perhaps more to anchor than to determine any decision of the court as to the responsibility or otherwise of their respective actions. Barrett established that in this case there was an eventual, voluntary effort to meet the tax obligations arising and a sustained effort to fund a company from entirely legitimate sources of capital. Barrett decided that although the directors” behavior could be seen to be highly reproachable in regards the non-payment of tax liabilities it was not behavior that could be classified as not being dishonest or irresponsible. Barrett was not satisfied that the court was required to make an order under s.150 of the Companies Act 1990, in respect of the directors, and declined to do so.

Mr. Justice Barrett

1 This is an application for a restriction order under s. 150 of the Companies Act1990, as amended, in respect of Mr. Christopher Gill and Mr. Martin Gill. At the hearings, the application focused on the failure of Access Cleaning Services Limited, the company of which Messrs. Gill were directors, to meet certain of its tax liabilities.

2 Mr. Christopher Gill and Mr. Martin Gill are former directors of Access Cleaning, a company that provided industrial cleaning services whereby its staff would attend offices and industrial premises and carry out cleaning duties. Mr. Martin Gill was the principal moving force within the company. Mr. Christopher Gill is his father. Access Cleaning traded between the date of its incorporation on l^st April, 2008, and the date of the making of the winding-up order in respect of Access Cleaning on 16 April, 2012, at which time it had an impressive 15 employees. As of 31^st May, 2009, Access Cleaning incurred a loss of €41,974. Between 1^st June, 2009 and 31^st May, 2010 it incurred a further loss of €67,603. In the following year to 31^st May, 2011, it made a profit of €2,680. So by any measure, in its last full year of trading before winding-up, Access Cleaning experienced a considerable turnaround. At the time of its winding-up, Access Cleaning had outstanding revenue liabilities of €57,433. These appear to have accrued from about December 2009 and the liquidator, in his affidavit evidence, offers his professional opinion "that the day to day operations of the Company were in all probability part financed by the arrears of taxes owing to the Revenue Commissioners."

3 Notably, however, its operations were also funded by a €35,000 capital injection that Mr. Martin Gill injected into the company in or about 2010 and which was, it seems, due to be followed by a further €30,000 that he was seeking to raise at the time that the company went into liquidation, at which time it apparently had a healthy order and ledger book with an amount of approximately €50,000 owing to it from debtors. These last two sums would likely have significantly reduced the liabilities of Access Cleaning to the Revenue Commissioners. Belatedly, but again notably, Mr. Martin Gill of his own volition, engaged with the Revenue Commissioners, in or about February 2012, offering to deal with the outstanding revenue debt on an instalment basis over two years. Perhaps surprisingly, this proposal was rejected by the Revenue Commissioners, though in fairness they had apparently sought on several previous occasions to deal with Access Cleaning regarding its tax liabilities. In the end the company was wound up at the behest of the Revenue Commissioners.

4 Under s. 150 of the 1990 Act, the court must grant the declaration sought in these proceedings unless satisfied that any of a variety of circumstances identified in s. 150(2) pertain, the relevant circumstances in this case being that Mr. Christopher Gill and Mr. Martin Gill have acted (a) honestly and (b) responsibly in relation to the conduct of the affairs of Access Cleaning and (c) there is no other reason why it would be just and equitable...