Dublin Heating Company Ltd v Hefferon

• Jurisdiction: Ireland
• Judge: Lynch J.,Mr Justice Murphy
• Judgment Date: 14 January 1993
• Neutral Citation: 1991 WJSC-HC 1875,1993 WJSC-HC 313
• Docket Number: No. 14426p/1990,Record No. 14426p Court 6/1990
• Court: High Court
• Date: 14 January 1993

DUBLIN HEATING CO LTD v. HEFFERON

IN THE MATTER OF HEFFERON KEARNS LIMITED (UNDER THE

PROTECTION OF THE COURT)

AND IN THE MATTER OF SECTION 33 OF THE COMPANIES (AMENDMENT)

ACT 1990

ON THE APPLICATION OF DUBLIN HEATING COMPANY LIMITED

BETWEEN

DUBLIN HEATING COMPANY LIMITED

PLAINTIFF

AND

THOMAS HEFFERON, MICHAEL KEARNS, COSMO MELLON, FINBAR O'NEILL AND CON O'DOHERTY

DEFENDANTS

1991 WJSC-HC 1875

No. 14426p/1990

THE HIGH COURT

Synopsis:

COMPANY

Insolvency

Court - Protection - Examiner - Appointment - Proceedings - Discovery - Company officer - Reckless conduct - Impugned conduct before date of enactment - Officer's liability for company debts - Statute - Interpretation - Prospective effect - Constitution - Prohibition against creation of infringements of the law retrospectively - Companies (Amendment) Act, 1990, ss. 5, 16, 33 - Constitution of Ireland, 1937, Article 15 - (1990/14426 P - Murphy J. - 5/7/91) - [1993] 3 I.R. 177 - [1992] ILRM 51

|Dublin Heating Co. Ltd. v. Hefferon|

CONSTITUTION

Oireachtas

Legislation - Powers - Restriction - Law - Infringement - Prohibition against creation of retrospective infringements - (1990/14426 P - Murphy J. - 5/7/91) [1993] 3 I.R. 177 [1992] ILRM 51

|Dublin Heating Co. Ltd. v. Hefferon|

WORDS AND PHRASES

"Infringements of the law"

Oireachtas - Legislation - Powers - Restriction - Laws - Infringement - Constitution - Prohibition against creation of retrospective infringements - (1990/14426 P - Murphy J. - 5/7/91)

|Dublin Heating Co. Ltd. v. Hefferon|

STATUTORY INTERPRETATION

Statute

Application - Retrospection - Law - Infringement - Creation - Presumption against retrospective effect - Constitution - Infringements of law - Prohibition against creation of retrospective infringements - (1990/14426 P - Murphy J. - 5/7/91)1992 ILRM 51

|Dublin Heating Co. Ltd. v. Hefferon|

Citations:

COMPANIES (AMDT) ACT 1990 S33(1)(A)

COMPANIES (AMDT) ACT 1990 S5

COMPANIES (AMDT) ACT 1990 S37

COMPANIES (AMDT) ACT 1990 S2

COMPANIES (AMDT) ACT 1990 S3

COMPANIES (AMDT) ACT 1990 S7

COMPANIES (AMDT) ACT 1990 S8

COMPANIES (AMDT) ACT 1990 S15

COMPANIES (AMDT) ACT 1990 S14

COMPANIES (AMDT) ACT 1990 S16

COMPANIES (AMDT) ACT 1990 S17(4)(e)

COMPANIES (AMDT) ACT 1990 S17(4)(f)

COMPANIES (AMDT) ACT 1990 S18

COMPANIES (AMDT) ACT 1990 S22

COMPANIES (AMDT) ACT 1990 S23

COMPANIES (AMDT) ACT 1990 S24

COMPANIES (AMDT) ACT 1990 S5(1)

COMPANIES (AMDT) ACT 1990 S18(3)

COMPANIES (AMDT) ACT 1990 S5(2)

COMPANIES (AMDT) ACT 1990 S5(3)

HAMILTON V HAMILTON 1982 IR 471

CRAIES ON STATUTE LAW 7ED 387

GARDNER V LUCAS 1878 APP CAS 582

FAMILY HOME PROTECTION ACT 1976 S3

CONSTITUTION ART 40.3.2

COMPANIES (AMDT) ACT 1990 S149(3)

CONSTITUTION ART 15.5

COMPANIES (AMDT) ACT 1990 S5(2)(f)

COMPANIES (AMDT) ACT 1990 S26(2)

COMPANIES (AMDT) ACT 1990 S16(i)

COMPANIES (AMDT) ACT 1990 S33

COMPANIES (AMDT) ACT 1990 S16(e)

COMPANIES (AMDT) ACT 1990 S16(f)

COMPANIES (AMDT) ACT 1990 S24(5)

COMPANIES (AMDT) ACT 1990 S24(6)

COMPANIES (AMDT) ACT 1990 S18(4)

O'HARA V O'HARA UNREP BARRON 22.6.90

COMPANIES (AMDT) ACT 1990 S138

1 Judgment of Mr Justice Murphy delivered the 5th day of July 1991

2 By an Order made herein on the 12th February 1991 Mr. Justice Costello directed the trial of the following issues:-

3 2 "1. Whether the liability created by Section 33 (1) (A) of the Companies (Amendment) Act 1990is retrospective in its effect.

4 2. Whether or not the Plaintiff is precluded from bringing the proceedings at this stage by virtue of Section 5 of the Companies (Amendment) Act 1990.

5 3. Whether the Court has any jurisdiction to make an Order under Section 33 of the Companies (Amendment) Act 1990while the Company remains under the protection of the Court where an application is made by a Creditor of the Company."

6 For the purposes of the foregoing issues it was accepted that the above-named Hefferon Kearns Limited (hereinafter referred to as "H-K") was incorporated in the State in the month of May 1988 to carry on the business of building contractors. That the Defendants (or more correctly the above first, second, third and fourthly named Defendants), to whom I shall refer as the Applicants, are and were at all material times "Officers" of H-K within the meaning of that term as defined in Section 33 of the Companies (Amendment) Act 1990(hereinafter referred to as "the 1990 Act"): That H-K is indebted to Dublin Heating Co. Ltd., (to whom I shall refer as the Respondents) in a sum in excess of £30,000 and that H-K is unable to pay its debts as they fall due. It was ordered that the Applicants should be Plaintiffs and the Respondents Defendants on the trial of the foregoing issues.

7 The 1990 Act was enacted on the 29th of August 1990.

8 Whilst the title to the 1990 Act explains that it is "AN ACT TO AMEND THE LAW RELATING TO COMPANIES AND TO PROVIDE FOR RELATED MATTERS" and expressly provides in Section 37 thereof that it is to be construed as one with the Companies Acts 1963to 1986it is clear that it, the 1990 Act, introduced and appears to deal almost exclusively with a concept and procedure new to Irish law.

9 The scheme of the 1990 Act is to permit certain persons in certain events to apply to the High Court by way of Petition for an Order for the appointment of an Examiner and to empower the Court to make such an Order where it "would be likely to facilitate the survival of the company" (see Sections 2 and 3 of the 1990 Act). The statutory powers conferred on an Examiner do not in general give him an executive role in relation to the affairs or assets of the company over which he is appointed but rather the power to obtain information (see Section 7, 8, 14 and 15) to enable him to produce a report to the Court within 21 days of his appointment (or such longer period as may be allowed) setting out the matters specified in Section 16 of the 1990 Act. Of the matters specified in that section those which are most informative as to the nature of the functions of the Examiner are set out in paragraphs (e) and (f) in the following terms:-

10 a "(e) a statement of opinion by the examiner as to whether the company, on the whole or any part of its undertaking, would be capable of survival as a going concern and a statement of the conditions which he feels are essential to ensure such survival, whether as regards the internal management and controls of the company or otherwise.

11 (f) his opinion as to whether the formulation, acceptance and confirmation of proposals for a compromise or scheme of arrangement would facilitate such survival."

12 There is then provision for the consideration of the contents of the report by the Court and other interested parties and at that stage the Court may (in accordance with Section 17 (4) (e) and (f)) direct the formulation by the Examiner of proposals for a compromise or scheme of arrangement and the summoning of meetings mentioned in the 1990 Act for the purpose of considering proposals for a compromise or scheme of arrangement. Section 18 of the 1990 Act deals with the formulation of such a compromise or scheme and its submission to meetings of members and creditors of the company. These proposals must comply with the requirements of Sections 22 and 23 of the 1990 Act but the essential feature of the Act is that under Section 24, thereof, the Court may in the circumstances and events described therein confirm the proposals made by the Examiner in his second report to the Court and such confirmation has the following consequences namely,:-

13 2 "(5) Where the court confirms proposals (with or without modification), the proposals shall be binding on all the members or class or classes of members, as the case may be, affected by the proposal and also on the company.

14 (6) Where the court confirms proposals (with or without modification), the proposals shall, notwithstanding any other enactment, be binding on all the creditors or the class or classes of creditors, as the case may be, affected by the proposals in respect of any claim or claims against the company and any person other than the company who, under any statute, enactment rule of law or otherwise is liable for all or any part of the debts of the company."

15 Clearly, therefore, the purpose of the 1990 Act is to confer upon the Court (subject to various qualifications and appropriate safeguards) the power and the means to impose upon a company, its members and its creditors a compromise or scheme of arrangement which will affect and, to a greater or lesser extent prejudice, the rights of such parties and in particular preclude them from exercising the rights to which they would have been entitled to exercise but for the judicially sanctioned compromise or arrangement.

16 The procedures envisaged by the 1990 Act could not be operated if during the examination by the Examiner, the preparation of his reports or the consideration of them by the interested parties any creditor was free to compel the full and immediate payment by the company of the debt due to him. For this reason it is provided in Section 5(1) of the 1990 Act that the company should be deemed to be under the protection of the Court from the date of the presentation of the Petition for the appointment of the Examiner to the date of the withdrawal or refusal of the Petition (where that is the case) or the expiration of a period of three months from the presentation of the Petition (subject to the power of the Court to extend the period of protection to enable the further report of the Examiner to be considered in accordance with the provisions of Section 18 (3) or (4)). Having defined this period Section 5 goes on in subsection (2) to provide (by subparagraphs (a) to (e)) to prohibit any form of execution against the company or the assets thereof during the period it is under the protection of the Court. The position with regard to...