Derbar Developments [Westport] Ltd v Companies Act 2014

• Jurisdiction: Ireland
• Court: High Court
• Judge: Mr Justice Mark Sanfey
• Judgment Date: 19 December 2022
• Neutral Citation: [2022] IEHC 709
• Docket Number: [Record No. 2021/83COS]

In the Matter of Derbar Developments (Westport) Limited

and

In the Matter of Section 738 of the Companies Act 2014

and

In the Matter of an Application by Everyday Finance Designated Activity Company to Restore Derbar Developments (Westport) Limited to the Register of Companies

[2022] IEHC 709

[Record No. 2021/83COS]

THE HIGH COURT

Company – Restoration – Register of Companies – Applicant seeking to restore a company to the Register of Companies – Whether the applicant had established that it was a creditor of the company

Facts: The applicant, Everyday Finance DAC, applied to the High Court to restore Derbar Developments (Westport) Ltd (the company) to the Register of Companies pursuant to s. 738 of the Companies Act 2014 (as amended). The applicant also sought a number of orders pursuant to s. 740 of the 2014 Act requiring the directors of the company to attend to certain matters relevant to the proposed restoration. The application was opposed by Mr Lavelle, one of the directors of the company. The company was struck off the Register on 21st January 2015. Mr Lavelle’s primary contention was that the applicant must establish that it was “a bona fide and established creditor before this date” (the affidavit of Mr Lavelle sworn on 30th June 2021, para. 4), and is not in a position to do so.

Held by Sanfey J that the applicant, for the purpose of the application, had established that it was a creditor of the company. Sanfey J was satisfied that the striking-off of the company had disadvantaged the applicant. Sanfey J was satisfied that it was just and equitable to make an order that the company be restored to the Register of Companies. In the circumstances, Sanfey J was satisfied that the reliefs sought at paras. 1 to 4 of the originating notice of motion in the application were appropriate.

Sanfey J held that he would make the following orders: (1) an order pursuant to s. 738 of the 2014 Act restoring the company to the Register of Companies; (2) an order pursuant to s. 740 of the 2014 Act directing the directors of the company, Mr Dobbin and Mr Lavelle, or each of them individually, to cause to be delivered to the Registrar of Companies any and all outstanding annual returns in accordance with part IV of the 2014 Act; (3) an order pursuant to s. 740 of the 2014 Act directing the directors of the company or each of them to deliver to the Revenue Commissioners all outstanding statements in relation to the company, as is required by s. 882 of the Taxes Consolidation Act 1997; (4) insofar as may be necessary, an order pursuant to s. 740 of the 2014 Act directing the directors of the company to take all reasonable steps to ensure that the company appoints a director and delivers to the Registrar of Companies the notification and consent required by ss. 149(8) and (10) of the 2014 Act and ensure either (i) that the person to be appointed is resident in an EEA State or (ii) unless a certificate under s. 140 of the 2014 Act has been granted in respect of the company by the Registrar of Companies, that the company provides a bond to the Registrar of Companies in accordance with s. 137 of the 2014 Act.

Application granted.

JUDGMENT of Mr Justice Mark Sanfey delivered on the 19 ^th day of December 2022

Introduction

1 . This judgment concerns an application to restore Derbar Developments (Westport) Limited (‘the company’) to the Register of Companies pursuant to s.738 of the Companies Act 2014 (as amended) (‘the Act’). The applicant also seeks a number of orders pursuant to s.740 of the Act requiring the directors of the company to attend to certain matters relevant to the proposed restoration.

2 . The application is opposed by Derek Lavelle, one of the directors of the company. The company was struck off the Register on 21 ^st January 2015; Mr Lavelle's primary contention is that the applicant Everyday Finance DAC (‘Everyday’) must establish that it was “a bona fide and established creditor before this date” [affidavit of Derek Lavelle sworn 30 ^th June 2021, para. 4], and is not in a position to do so.

3 . The applicant was represented by Anthony Thuillier BL, and Mr Lavelle was represented by Brian Walker BL. Both counsel proffered lengthy written submissions – and indeed supplemental submissions – and made helpful and detailed submissions at the hearing of the application.

Background

4 . The relevant background and basis for the application is set out in the affidavit grounding the application sworn by Paul Murphy on 19 March 2021. Mr Murphy is an asset manager employed by Link ASI Limited (‘the servicer’) which provides loan administration and asset management services to Everyday in respect of the company's loans.

5 . Mr Murphy avers that the application is brought on behalf of Everyday, which he contends is a creditor of the company by virtue of a deed of transfer dated 2 August 2018 and an amendment and restatement deed dated 22 October 2018 between Allied Irish Banks plc (‘the bank’) and Everyday by which it is contended that Everyday acquired the right, title and interest of the bank in the facility letters, mortgages and guarantees on which the alleged debt of the company to Everyday is based.

6 . Mr Murphy avers that the company was incorporated on 2 ^nd April 2004 as a single member private company limited by shares. The registered office of the company prior to its dissolution was located at Slogger, Carrtowick, Westport, County Mayo, and the objects for which the company was established included, inter alia, “to carry on the business or businesses of buying, owning, developing and selling commercial and private property, and/or to lease and maintain same” as set out in the memorandum and articles of association of the company.

7 . It appears that the company last filed an annual return on 2 October 2012 in respect of the period ending on that date. The company was involuntarily struck off the Register of Companies pursuant to the provisions of the Act on 21 January 2015. Mr Murphy avers that, at the date of its dissolution, Barry Dobbin and Mr Lavelle were the directors of the company. Mr Dobbin was served with the present application but did not respond to it.

8 . The company was provided with loan facilities by the bank pursuant to the terms of a facility letter of 21 January 2008 and a further facility letter of 19 June 2008. The company granted certain security over its assets to the bank, which security included mortgage debentures of 16 September 2004, 14 September 2005 and 18 May 2006, each securing various lands in County Mayo in favour of the bank. In addition to the mortgages, two guarantees were provided in accordance with the facility letters to the bank in respect of the company's liabilities: a guarantee of 4 March 2008 from Derbar Developments Limited and Westport Coursing Club Limited up to the sum of €1,338,000; and a further guarantee of 24 June 2008 from Mr Lavelle to the bank up to the sum of €1,338,000.

9 . Mr Murphy avers that the company is in breach of the terms of the facility letters in that it has failed to make repayments in respect of the loan facilities, and that a sum of €1,565,559.05 is due and owing by the company to the applicant as of 6 January 2021.

10 . Everyday now wishes to enforce the mortgages against the company with a view to realising the assets secured by the mortgages, and in particular, intends to appoint a receiver to the assets. In order to ensure that a receiver can be validly appointed pursuant to the mortgages, Everyday wishes to ensure that a notice of demand is validly served on the company in respect of its liabilities under the facility letters. Mr Murphy avers that the applicant may also wish to enforce the guarantees against the relevant guarantors, which would also require a notice of demand to be served on the company. Everyday considers that, in order for a demand to be validly served on the company in accordance with the terms of the facility letters and mortgages, it is necessary for the company to be restored to the Register of Companies.

11 . Everyday considers that it is a “creditor” of the company within the meaning of s.738 of the 2014 Act, and Mr Murphy avers that the applicant is not aware of the State having intermeddled with any of the company's assets since it was struck off and dissolved, nor is Everyday aware of any claim against the assets being made by or on behalf of any other party. Mr Murphy also avers that Everyday “knows of no person or persons who would be prejudiced by the restoration of the company [to the Register]…” [para. 21].

12 . I should say that the facility letters, a redacted copy of the deed of transfer and amendment and restatement deed, the last annual return, the mortgages and the guarantees are all exhibited to Mr Murphy's affidavit.

Mr Lavelle's affidavit

13 . Mr Lavelle swore an affidavit in response to the application on 30 June 2021. He nails his colours firmly to the mast at para. 3 of the affidavit, in which he avers that he does not accept that Everyday “…is entitled or has locus standi to make this application in their alleged capacity as a creditor of the company in circumstances that they have put no evidence before this honourable Court to prove that they were a creditor of the company when it was struck off the Register on 21 January 2015”. He goes on to aver at para. 4 that he is advised “…that an applicant seeking relief pursuant to section 738 of the Companies Act 2014 on the basis that an applicant has been disadvantaged by the striking off of the company on 21 January 2015 must in fact be…a bona fide and established creditor before this date. Everyday Finance Designated Activity Company was not such a creditor under any circumstances”. Mr Lavelle avers that he has called on the applicant to produce “the relevant security documentation establishing their alleged legal interest in the property mentioned...