Dowall v Cullen & Rocliffe (Hocroft Developments Ltd, Re)

JurisdictionIreland
JudgeMr. Justice William M. McKechnie
Judgment Date09 December 2009
Neutral Citation[2009] IEHC 580
CourtHigh Court
Date09 December 2009

[2009] IEHC 580

THE HIGH COURT

[No.2COS/2000]
Dowall v Cullen & Rocliffe (Hocroft Developments Ltd, In Re)
IN THE MATTER OF HOCROFT DEVELOPMENTS LIMITED (IN LIQUIDATION)
and IN THE MATTER OF SECTION 150 OF THE COMPANIES ACT 1990 AND SECTION 56 OF THE COMPANY LAW ENFORCEMENT ACT 2001

Between

LIAM DOWALL
Applicant
-and-
STEPHEN CULLEN, PAUL ROCLIFFE AND DAVID CULLEN
Respondents

COMPANIES ACT 1990 S150

COMPANIES ACT 1963 S245

COMPANY LAW ENFORCEMENT ACT 2001 S56

COMPANY LAW ENFORCEMENT ACT 2001 (SECTION 56) REGS 2002 SI 324/2002 SCHED

COMPANY LAW ENFORCEMENT ACT 2001 S56(2)

COMPANIES ACT 1990 S149(2)

COMPANIES ACT 1990 S149(5)

HUGHES v DUFFY & HANRATTY 2005 1 IR 571 2005/30/6278 2005 IEHC 145

KNOCKLOFTY HOUSE HOTEL LTD & ECCLESHALL LTD (IN LIQUIDATION), IN RE 2005 4 IR 497 2005/35/7353 2005 IEHC 105

MANNING v BENSON & HEDGES LTD 2004 3 IR 556 2005 1 ILRM 190 2004/29/6876 2004 IEHC 316

DUIGNAN v CARWAY 2001 4 IR 550

EUROPEAN CONVENTION ON HUMAN RIGHTS & FUNDAMENTAL FREEDOMS ART 6.1

DAVIES v UNITED KINGDOM 2002 35 EHRR 29 2005 BCC 401 2006 2 BCLC 351

EASTAWAY v UNITED KINGDOM 2006 2 BCLC 361 2005 40 EHRR 17

DYER v WATSON 2002 3 WLR 1488 2004 1 AC 379 2002 4 AER 1

PRIMOR PLC v STOKES KENNEDY CROWLEY & OLIVER FREANEY & CO 1996 2 IR 459 1995/20/5287

EUROPEAN CONVENTION ON HUMAN RIGHTS ACT 2003 S1

EUROPEAN CONVENTION ON HUMAN RIGHTS ACT 2003 S3(1)

COMPANIES ACT 1963 S2(1)

LYNROWAN ENTERPRISES LTD, IN RE UNREP O'NEILL 31.7.2002 2002/15/3709

RICHBOROUGH FURNITURE LTD, IN RE 1996 1 BCLC 507 1996 BCC 155

COURTNEY THE LAW OF PRIVATE COMPANIES 2ED 2002 PARA 8.054

COURTNEY THE LAW OF PRIVATE COMPANIES 2ED 2002 PARA 8.056

HYDRODAN (CORBY) LTD (IN LIQUIDATION), IN RE 1994 BCC 161 1994 2 BCLC 180

SECRETARY OF STATE FOR TRADE & INDUSTRY v TJOLLE 1998 BCC 282 1998 1 BCLC 333

KAYTECH INTERNATIONAL PLC, IN RE 1999 BCC 390 1999 2 BCLC 351

FIRST CLASS TOY TRADERS LTD (IN LIQUIDATION), IN RE; GRAY (LIQUIDATOR) v MCLOUGHLIN & TUOHY UNREP FINLAY-GEOGHEGAN 9.7.2004 2004 IEHC 289

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

COMPANIES ACT 1990 S27(1)

FYFFES PLC v DCC PLC & ORS UNREP LAFFOY 21.12.2005 2006/25/5125 2005 IEHC 477

INSOLVENCY ACT 1986 S251 (UK)

SECRETARY OF STATE FOR TRADE & INDUSTRY v DEVERELL 2000 2 BCLC 133 2001 CH 340 2000 2 WLR 907 2000 2 AER 365 2000 BCC 1057

COMPANY DIRECTORS DISQUALIFICATION ACT 1986 S22(5)

COMPANIES ACT 1990 S27

VEHICLE IMPORTS LTD (IN LIQUIDATION), IN RE UNREP MURPHY 23.11.2000 2000/17/6574

COMPANIES ACT 1990 S160

COMPANIES ACT 1990 PART V

INVESTMENT FUNDS COMPANIES & MISCELLANEOUS PROVISIONS ACT 2005 PART IV

COMPANIES ACT 1963 S297

COMPANIES ACT 1963 S297A

COMPANIES ACT 1990 S137

COMPANIES ACT 1990 S138

COMPANIES (AMDT) ACT 1990 S33

COMPANIES (AMDT) ACT 1990 S34

FORDE & KENNEDY COMPANY LAW 4ED 2008 PARA 613

GASCO LTD (IN LIQUIDATION), IN RE UNREP MCCRACKEN 5.2.2001 2001/10/2716 2001 8 CLP 72

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

COMPANIES ACT 1990 S150(2)

COMPANIES ACT 1990 S150(2)(A)

EDC v UNITED KINGDOM 1998 BCC 370

COMPANY LAW ENFORCEMENT ACT 2001 S56(3)

COMPANY LAW ENFORCEMENT ACT 2001 S56(1)

COMPANY LAW

Directors

Restriction - Shadow director - De facto director - Whether respondent shadow director within 12 months of date of commencement of winding up - Test to be applied - Characteristics of shadow director - Whether directions or instructions given by person - Whether true directors accustomed to act upon such instructions habitually - Whether court only entitled to look at matter occurring within 12 month period or entire tenure of person - Whether evidence outside period admissible - Delay - Whether delay bar to bringing proceedings - Test - Factors to be taken into account - Hughes v Duffy [2005] IEHC 145, [2005] 1 IR 571; Manning v Benson & Hedges Ltd [2004] IEHC 316, [2004] 3 IR 556; Duignan v Carway [2001] 4 IR 550; Davies v United Kingdom (2002) 35 EHRR 29; Dyer v Watson [2002] 3 WLR 1488; In re Richborough Furniture Ltd [1996] 1 BCLC 507; In re Hydrodan (Corby) Ltd [1994] 2 BCLC 180; Secretary of State for Trade and Industry v Tjolle [1998] 1 BCLC 333; In re Kaytech International [1999] 2 BCLC 351; Secretary of State for Trade and Industry v Deverell [2001] Ch 340; In re Vehicle Imports Ltd (Unrep, HC, Murphy J, 23/11/2000); In Re Gasco Ltd (Unrep, HC, McCracken J, 5/2/2001) and EDC v United Kingdom [1998] BCC 370 considered - In re Knocklofty House Hotel Ltd [2005] IEHC 105, [2005] 4 IR 497; Primor Plc v Stokes Kennedy Crowley [1996] 2 IR 459; In re Lynrowan Enterprises Ltd (Unrep, HC, O'Neill J, 31/7/2002) ; La Mosselle Clothing Ltd v Rosegem Ltd [1998] 2 ILRM 345; Fyffes plc v DCC plc [2005] IEHC 477, [2009] 2 IR 417 and In Re Squash (Irl) Ltd [2001] 3 IR 35 applied - Eastaway v United Kingdom (2006) 2 BCLC 361 approved - Gray v McLoughlin [2004] IEHC 289, (Unrep, HC, Finlay-Geoghegan J, 9/7/2004) followed - Companies Act 1990 (No 33), ss 27, 137, 138, 149, 150 and 160 - Companies Act 1963 (No 33), ss 2 245, 297 and 297A - Company Law Enforcement Act 2001 (No 28), ss 56 and 245 - Companies (Amendment) Act 1990 (No 27), ss 33 and 34 - Company Law Enforcement Act 2001 (Section 56) Regulations (SI 324/2002) - European Convention on Human Rights Act 2003 (No 20), ss 1 and 3 - Application refused (2000/2COS - McKechnie J - 9/12/2009) [2009] IEHC 580

Dowall v Cullen

1

1. The above company, Hocroft Developments Limited, was incorporated on the 9 th November 1995 and for the reasons later explained in this judgment went into liquidation on the 14 th April 2000. The applicant, Mr. Liam Dowall, was duly appointed Official Liquidator and has continued to occupy that role to the date hereof. Arising out of this liquidation the applicant has instituted these proceedings seeking a restriction order against all respondents pursuant to s. 150 of the Companies Act 1990 ("CA 1990"). During the currency of such proceedings it has been agreed by the parties that two matters should be resolved by way of preliminary issue, firstly whether Mr. David Cullen (the "third respondent") "was either (i) a de facto director, or (ii) a shadow director" of the Company, and secondly whether the Official Liquidator is entitled to proceed with the substantive application, notwithstanding the delay in bringing those proceedings.

2

2. Before deciding upon these two issues, in respect of which Mr. Paul Rocliffe play no active part, it is useful to firstly outline, in a brief manner, the background of the Company and the history to date of these proceedings.

Background
3

3. Hocroft Developments Limited ("Hocroft" or "the Company") was incorporated on 9 th November 1995 and shortly afterwards converted to a single member company, with Mr. Stephen Cullen, the first respondent, being the sole shareholder thereof. It had a nominal share capital of IR£1,000,000 with a paid-up share capital of IR£2. The current directors are Stephen Cullen, who was so registered on 1 st August 1996, and Paul Rocliffe, the second respondent, who was appointed on 1 st April 1998. The Company, which was established to carry on the business of builders and property developers, was involved in two property transactions, Beechfield House, Clontarf, Dublin 3 and the Village Inn and associated lands at Bettystown, Co. Meath, and in one building project, at the Paramount Hotel, Parliament Street, Dublin 2. The applicant contends that it was as a direct result of this project, the only ever undertaken by the Company, that its insolvency arose.

4

4. Mr. David Cullen, at all relevant times, was the owner of the Paramount Hotel, Dublin 2. In or around early 1998 discussions took place between him and his brother Stephen, relating to the planned development of that hotel. It was agreed that Hocroft would be awarded the contract for its development on a fixed price basis, the sum being IR£4,540,221 plus VAT. A contract was drawn up between the parties reflecting this fact, although it is unsigned and undated. The construction work itself was tendered for by J.J. Rattigan & Company Limited ("JJR") in the sum of IR£3,084,863.50 plus VAT. It would appear that no contract was ever executed in this regard.

5

5. On 4 th August 1998 JJR took possession of the site and commenced work on the hotel. Disputes arose between the builder and the Company's representatives arising out of delays in the works programme. Both sides accused the other of being the cause; however it is not relevant for our purposes to examine this in any detail. Eventually, agreed variations resulted in the original completion date being extended by twenty-seven days to the 28 th April 1999.

6

6. The project, however, was not completed on this date and works continued for some time thereafter. The architect also continued to issue interim certificates in this intervening period. On 13 th August 1999 Hocroft failed to discharge the sum due on foot of one such certificate; this lead to JJR serving a Notice of Suspension of Works on 17 th September 1999. Some three days later Notice of Default was served on the Company. Eventually, following negotiations between the parties, it was agreed on foot of a Supplemental Agreement that payment of interim certificates would be suspended until practical completion had been reached and so certified. This occurred on 4 th November 1999. It was as a result of the non-payment by Hocroft of monies due after this date that lead JJR to petition for the winding up of the Company.

7

7. This petition issued on 11 th January 2000. By Notice of Motion dated 21 st January 2000, grounded upon the affidavit of Stephen Cullen, the Company sought an injunction to restrain the advertising of the petition. Following an exchange of affidavits, Kelly J. gave judgment on 18 th February 2000 dismissing the...

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4 cases
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    ...pattern of reliance by directors on communication of fourth respondent - Whether fourth respondent shadow director - Dowall v Cullen [2009] IEHC 580 (Unrep, HC, McKechnie J, 9/12/2009) followed - Panorama Developments (Guildford) Ltd v Fidelis Furnishing Fabrics Ltd [1971] 2 QB 711; Fyffes ......
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