Decobake Ltd ((in Liquidation))

• Jurisdiction: Ireland
• Judge: Mr. Justice Haughton
• Judgment Date: 13 October 2021
• Neutral Citation: [2021] IECA 254
• Court: Court of Appeal (Ireland)
• Docket Number: Record Number: 2018/106 Record Number: 2020/209 High Court Record Number: 2017/225 COS

In the Matter of Decobake Limited (in Liquidation) and in the Matter of the Companies Act, 2014

Between/

Paul Coyle

Appellant

and

Declan De Lacy

Respondent

and

Denis McHugh

Notice Party

and

The Revenue Commissioners

Notice Party

[2021] IECA 254

Haughton J.

Power J.

Collins J.

Record Number: 2018/106

Record Number: 2018/107

Record Number: 2020/209

High Court Record Number: 2017/225 COS

THE COURT OF APPEAL

JUDGMENT of Mr. Justice Haughton delivered on the 13th day of October, 2021

Introduction

1 These three closely related appeals are from orders made in liquidation proceedings by O'Regan J. on 5 March 2018 as follows:-

(1) (a) An order pursuant to s. 645(1) of the Companies Act, 2014 (“the Act of 2014”) fixing the amount of remuneration payable to the respondent as provisional liquidator of Decobake Limited (in Liquidation) (“the Company”) in respect of his work in the period 29 June 2017 and 24 July 2017, being the period of the provisional liquidation, in the sum of €79,308.91 inclusive of outlays and VAT (“the Fee Approval Order/Application”, a late appeal to which the assigned record number is 2020/209);

(b) an order that the legal costs of the respondent for the period of his appointment as provisional liquidator are to be taxed;

(c) and, pending taxation and certification of such costs, an order granting the respondent liberty to pay to his solicitors out of the assets of the Company the sum of €38,092.40 (inclusive of outlays and VAT) on account of such costs on the undertaking of his said solicitors to account for the said sum and to reimburse any differential in the event that the said costs are taxed to a lesser amount than shall have been paid on account;

(d) an order that the respondent be entitled to his costs of taxation of the said costs as costs in the winding up of the Company; and

(e) a stay on the said orders up to and including 20 April 2018.

(2) On foot of the appellant's Notice of Motion dated 23 February 2018 seeking discovery of thirty-one categories of documents in the context of the Fee Approval Application (“the Discovery Motion”), an order refusing the reliefs sought in the Discovery Motion and awarding the respondent his costs of the Discovery Motion as costs in the winding up, and, in the event that the respondent is unable to recover the costs in the winding up, an order that the respondent do recover his costs against the appellant;

(3) On foot of the appellant's application by Notice of Motion dated 24 January 2018 to dismiss the respondent's Fee Approval Application pending the outcome of certain related proceedings (“the Dismissal Motion”), an order refusing to grant the reliefs sought and an order that the respondent be entitled to his costs of and incidental to the Dismissal Motion and order as costs in the winding up of the Company and, in the event that the respondent is unable to recover his said costs in the winding up, an order that the respondent do recover the said costs as against the appellant.

Background

2 The appellant is a former director of the Company, and he appeared without legal representation in the High Court, and in this court. The Company was incorporated on 5 May 2000 as a private company limited by shares. The Company's trading activities included:-

• the operation of a retail outlet selling baking ingredients and equipment, and a cafeteria at Clane Business Park;

• the operation of a retail outlet selling baking ingredients and equipment at 3/4 Bachelors Walk, Dublin 1;

• the operation of a retail outlet offering confectionary/desserts trading under the name “Sweet Republic” at 26 Bachelors Walk, Dublin 1;

• the manufacture of a “ready-to-roll icing”, printer cartridges with edible ink, and sugar paper from premises at Clane Business Park; and

• the wholesale distribution of baking ingredients and equipment.

3 The Company was at the date of the Petition (which was issued on 29 June 2018), indebted to Dublin City Council in respect of rates for the years 2012 through to 2017, in the total amount of €101,894. A number of decrees/warrants for execution had been obtained by Dublin City Council in respect of this indebtedness up to and including 2015. These warrants for execution were passed to the Dublin City Sheriff, and on 14 December 2016 the Sheriff's attempts to enter onto the premises 3/4 Bachelors Walk were met with physical force by those present and he was unable to execute the warrants. The Company then applied to the Dublin Metropolitan District Court for an order setting aside the said warrants for execution, which application was heard and determined on 27 June 2017. The District Court dismissed the application to set aside the warrants.

4 A notice pursuant to s. 570 of the Act of 2014 demanding the rates debt was delivered to the Company's registered office on behalf of Dublin City Council on 4 May 2017 (although the receipt of this was later disputed), and the petition to wind up the Company was filed on behalf of Dublin City Council on 29 June 2017. The application for the appointment of a provisional liquidator was made on the same date by Mr. Denis McHugh, the first notice party, as Collector of Rates. By order dated 29 June 2017 (Gilligan J.), the respondent was appointed provisional liquidator to the Company. On the following day, an application was made by Mr. Maher, a solicitor acting for the Company and/or its directors, to set aside the order of Gilligan J., but that application was unsuccessful. While objection was taken to the making of the order by Gilligan J., no appeal was lodged against it.

5 By order dated 24 July 2017 (Keane J.), the respondent was appointed official liquidator to the Company. An appeal was lodged by the Company and Mr. Paul Coyle and Ms. Margaret Coyle, directors, against the order of Keane J., but this court affirmed the order appointing the respondent as official liquidator of the Company: In the matter of Decobake Ltd. and in the matter of The Companies Act 2014 [2019] IECA 169. Costello J., in delivering the judgment of the court, rejected arguments inter alia that Keane J. erred in deeming good the service of the s.570 notice, that he erred in deeming the Company to be insolvent in all the circumstances, that he erred in relying on the report of the provisional liquidator, or that he failed to take cognisance of the wishes of creditors and contributories.

6 The parties to these appeals are also parties to plenary proceedings bearing Record No. 2017/7252P: Declan De Lacy v Paul Coyle, Margaret Coyle, Emily Coyle and Amy Coyle (“the plenary proceedings”). In those proceedings, the respondent as plaintiff seeks to address the question of ownership of the intellectual property and certain products marketed and sold by the Company, the publication of damaging and defamatory material concerning the Company and the liquidation, and acts of interference in the liquidation by the defendants. The defendants for their part have filed a Defence and Counterclaim, which has been supplemented over time, although not by way of formal amendment. Discovery was sought by both the respondent as plaintiff and the defendants in those proceedings and judgment was delivered by McDonald J. on 18 July 2018, with neutral citation [2018] IEHC 428, with orders for discovery to be made by both sides. A further order as to the manner in which the parties were to make discovery was made by McDonald J. on 7 March 2019.

7 The liquidation of the Company has also involved inter alia a series of applications under the Act of 2014 by the respondent as liquidator and by the appellant, which are recorded in the judgment of Allen J. of 18 February 2020 ( De Lacy v Coyle & Ors [2020] IEHC 57). These included an application by the appellant to remove the respondent as liquidator for cause shown and/or to annul the liquidation. In the context of those applications, the appellant applied to Allen J. for the release of discovered documents, discovery of which was ordered by McDonald J. in the plenary proceedings. Permission to deploy the discovery documents was refused by Allen J., who noted that the same application had earlier been made to and refused by McDonald J. himself.

The relevant statutory provisions

8 Before referring to the affidavit evidence it is appropriate to refer to the relevant provisions of the Act of 2014. Section 645 provides –

“645. (1) A provisional liquidator is entitled to receive such remuneration as is fixed by the court.

(2) Section 648 applies with respect to the fixing of such remuneration and otherwise supplements this section.”

9 The relevant part of s. 648 is ss.(9) which sets out the criteria that the court should consider. It provides –

“(9) In—

(a) fixing the amount of a provisional liquidator's remuneration under section 645; or

(b) […]

the following shall be taken into account by the court, […]

(i) the time properly required to be given by the person as liquidator and by his or her assistants in attending to the company's affairs;

(ii) the complexity (or otherwise) of the case;

(iii) any respects in which, in connection with the company's affairs, there falls on the liquidator any responsibility of an exceptional kind or degree;

(iv) the effectiveness with which the liquidator appears to be carrying out, or to have carried out, his or her duties; and

(v) the value and nature of the property with which the liquidator has to deal.”

The Respondent's principal affidavit

10 The respondent swore an affidavit on 8 December 2017 to ground the Fee Approval Application. Having referred to his appointment, in para. 5, he refers to “features of the present case which are particularly complex and which required to be urgently addressed”, as detailed in his exhibited Provisional Liquidators Report dated 24 July 2017 (“the PL Report”) which was prepared for the purpose of the respondent reporting to the court at the close of...