Dominar Group Ltd (in Voluntary Liquidation) v The Companies Act 2014
| Jurisdiction | Ireland |
| Judge | Mr. Justice Mark Sanfey |
| Judgment Date | 08 May 2020 |
| Neutral Citation | [2020] IEHC 208 |
| Docket Number | [No. 2018/279 COS] |
| Court | High Court |
| Date | 08 May 2020 |
IN THE MATTER OF DOMINAR GROUP LIMITED (IN VOLUNTARY LIQUIDATION)
AND IN THE MATTER OF SECTION 638 OF THE COMPANIES ACT 2014
[2020] IEHC 208
Mark Sanfey J.
[No. 2018/279 COS]
THE HIGH COURT
Liquidator – Removal – Companies Act 2014 s. 638(1)(b) – Applicant seeking an order pursuant to s. 638(1)(b) of the Companies Act 2014 for the removal of the respondent as liquidator of the company – Whether good cause had been shown for the removal of the respondent as liquidator
Facts: The applicant, Print & Display Ltd, applied to the High Court for an order pursuant to s. 638(1)(b) of the Companies Act 2014 for the removal of the respondent, Mr Dowdall, as liquidator of Dominar Group Ltd (in voluntary liquidation). The applicant owned 50% of the shares in the company. The other shareholder was the notice party, Mr Curneen, who also owned 50% of the company. The notice of motion also sought the appointment pursuant to s. 638(1)(b) of a named alternative liquidator.
Held by Sanfey J that he did not believe that “good cause” had been shown for the removal of the respondent as liquidator. He was satisfied that the respondent would conduct the remainder of the matters in the liquidation, primarily the removal of the material from the site and the sale of Osmanska 7, the discharge of all expenses and the distribution of net sale proceeds to the shareholders, in a prompt and orderly fashion, and those issues did not warrant the appointment of a replacement liquidator. Sanfey J was not disposed to order the removal of the respondent where the only point of doing so would be to permit a replacement liquidator to investigate the respondent’s conduct, at very considerable cost, and with the inevitability of prolonging the liquidation considerably. He noted that there had been no suggestion of dishonesty on the part of the respondent.
Sanfey J held that the application would be refused.
Application refused.
The application before me is for an order pursuant to s.638(1)(b) of the Companies Act 2014 for the removal of the respondent as liquidator of Dominar Group Limited (in voluntary liquidation), hereafter referred to as ‘the company’. The applicant owns 50% of the shares in the company; the other shareholder is Mr. Michael Curneen, the notice party, who also owns 50% of the company. The notice of motion also seeks the appointment pursuant to s.638(1)(b) of a named alternative liquidator.
The respondent was appointed as liquidator of the company on 9th April, 2008. The directors swore a declaration of solvency on that date, and also made a declaration that the company would be in a position to pay its debts in full within 12 months of the commencement of the winding up. The company passed a special resolution that the company was to be wound up voluntarily as a members’ voluntary winding up. The company embarked on this course of action after a serious deterioration in the relationship between the shareholders, which involved the issue of proceedings under s.205 of the Companies Act 1963 by the applicant against Mr. Curneen. Ultimately, these proceedings were compromised, and as part of this compromise the parties agreed to the appointment of a liquidator.
The originating notice of motion before me issued on 16th July, 2018. By order of 12th April, 2019, this Court directed the service of written submissions according to a prescribed timetable. The applicant also applied to this Court for leave to examine the respondent for the purposes of the application. It was accepted by the applicant that, should the order for examination be made, Mr. Jim Conway, a director of the applicant, would make himself available for examination on his affidavits. The extent to which examination should be allowed was the subject of argument before O'Connor J., who delivered an ex tempore judgment setting out the basis of the orders made by him, which were as follows:
“(1) Liberty to the Applicant to cross-examine the liquidator in respect of whether he failed to preserve and safeguard the assets of the company
(2) Liberty to the Applicant to cross-examine the liquidator regarding the financing for the removal of waste from the Osmanska 7 site subject to the approval of the trial judge
(3) Liberty to Counsel representing the liquidator to cross-examine Mr Jim Conway on such facts as the Judge hearing the application to remove the liquidator may approve …”.
Ultimately, the matter came before me for hearing on 22nd January, 2020. The hearing took four days, during the course of which the respondent was examined by counsel for the applicant. The parties agreed that the examination of Mr. Conway would not be necessary. Both parties made very detailed written submissions, and I have also had the benefit of transcripts of the hearing.
It will be apparent that the conduct of the liquidation has been far more protracted than one would normally expect of a member's voluntary liquidation. As the applicant seeks the removal of the respondent as liquidator, it will be necessary to examine both the context in which the liquidator was appointed, and his conduct of the liquidation, in some detail.
The facts of the matter are set out and debated at considerable length in the affidavits sworn by the parties. While all of such matters have been assimilated by the court and taken into account in this judgment, what follows is a non-exhaustive synopsis of matters with the intention solely of setting out the context in which the current application takes place.
The applicant and the notice party (‘Mr. Curneen’) each hold 50% of the shares in the company. The company is a holding company which owns a subsidiary called Print & Display (Polska) Sp.Zo.o (‘P&D Polska’). This company was involved in the printing industry in the Polish and European markets. Mr. Curneen, with the agreement of the applicant, had control of the day to day management of this business.
Unhappy differences arose between the shareholders, and the applicant presented a petition on 12th December, 2007 pursuant to s.205 of the Companies Act 1963 seeking relief against Mr. Curneen on the grounds that the affairs of the company were being conducted by Mr. Curneen in a manner oppressive to the applicant in its capacity as a member of the company, or that the affairs of the company were being conducted in disregard of the applicant's interests as a member of the company.
The applicant alleged in the s.205 proceedings that it had become aware in October 2007 that land located at Osmanska 7, Warsaw, (“Osmanska 7”) the property of P&D Polska, had been transferred without the applicant's knowledge to another Polish company Grosbeak Sp.Zo.o (‘Grosbeak’), controlled by Mr. Curneen. Mr. Conway averred in the grounding affidavit in the present application that the applicant obtained injunctive relief following the institution of the s.205 proceedings restraining Mr. Curneen from giving effect to certain resolutions of the company – at a time when the board of the company was controlled by Mr. Curneen - sanctioning large salary and pension increases to Mr. Curneen, together with certain retrospective and other payments. Mr. Conway further averred that the applicant had, subsequent to the aforesaid settlement, instituted contempt proceedings in this Court in respect of what the applicant considered to be contempt of the court's order of 12th December, 2007 granting injunctive relief.
I should say at this point that Mr. Curneen, although a notice party, did not participate in the present proceedings other than by submitting an affidavit in support of the retention of the respondent as liquidator. At para. 4 of that affidavit, Mr. Curneen recorded that he did “not agree with Mr. Conway's account [in the grounding affidavit to this application] … of the background to the settlement in 2008 … which led to the appointment of Mr Dowdall, and nor is Mr. Conway's account complete”. However, Mr. Curneen declined to address the detail of such matters in his affidavit, on the basis that they were “not relevant to the current application”.
What is not in dispute, and what is clear from the evidence both documentary and on affidavit, is that there was what Mr. Conway describes as a “catastrophic deterioration in the relationship between the Company's shareholders, leading to an irreconcilable impasse in corporate management …” of the company. This led to a settlement by agreement of the parties on 3rd March, 2008. The terms of this settlement are of some importance, and are set out below:
“The parties to these proceedings agree to the following terms in full and final settlement of the proceedings:
(1) The petitioner and the respondent agree to the appointment of a voluntary liquidator of Dominar Group Limited for the purpose of realising the assets of that company.
(2) The liquidation will proceed as a members’ voluntary winding up of Dominar Group Limited.
(3) The injunction granted by the High Court on the 12th of December, 2007, shall continue until the appointment of the voluntary liquidator.
(4) The parties, by consent, will pass a resolution to put Dominar Group Limited into members’ voluntary liquidation. The meeting of the members for this purpose shall be held by close of business on Friday the 7th of March, 2008.
(5) On the appointment of the liquidator the proceedings shall be struck out with no order.
(6) For the avoidance of doubt, the liquidator shall realise the assets of [P&D Polska], Studio Dom. Sp.Zo.o and [Grosbeak] as soon as possible.
(7) An insolvency partner of BDO Simpson Xavier shall be appointed voluntary liquidator.
(8) The directors of Dominar Group Limited shall each swear a Declaration of Solvency in...
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Print and Display Ltd v Dowdall
...voluntary liquidation) (“the Company”). In that judgment, which should be read in conjunction with this judgment, and which is cited at [2020] IEHC 208 and was delivered electronically, I refused the application, and invited submissions from the parties as to the orders to be made, particul......