Fennell v Frost

• Jurisdiction: Ireland
• Judge: Justice Finlay Geoghegan
• Judgment Date: 05 June 2003
• Neutral Citation: [2003] IEHC 15
• Court: High Court
• Docket Number: [2003 No. 187 Cos]
• Date: 05 June 2003

[2003] IEHC 15

THE HIGH COURT

Record No. 187 COS/2003

FENNELL (LIQUIDATOR) v. FROST & ORS; EUROKING MIRACLE (IRL) LTD, IN RE

IN THE MATTER OF EUROKING MIRACLE (IRELAND) LIMITED (IN VOLUNTARY LIQUIDATION)AND IN THE MATTER OF SECTION 150 OF THE COMPANIES ACT 1990 AND SECTION 56 OF THE COMPANY LAW ENFORCEMENT ACT 2001

BETWEEN:-

KEN FENNELL AS LIQUIDATOR OF THE COMPANY IN THE WITHIN PROCEEDINGS

Applicant

-AND-

ALAN NORMAN FRANCIS FROST, JANET MARY BROWNE, JONATHAN RAIFE, JOSEPH CECIL LAMBERTY and MARION RYAN

Respondents

Citations:

COMPANIES ACT 1990 S150

RSC O. 75(B)

COMPANIES ACT 1963 S267

COMPANIES ACT 1963 S214

COMPANY LAW ENFORCEMENT ACT 2001 S56

COMPANY LAW ENFORCEMENT ACT 2001 S56(2)

COMPANIES ACT 1990 PART IV

COMPANIES ACT 1963 S351

COMPANIES ACT 1963 S195

COMPANIES ACT 1963 S195(6)

COMPANIES ACT 1963 S195(7)

COMPANIES ACT 1963 S149(2)

CHEMICAL BANK V MCCORMACK 1983 ILRM 350

COMPANIES ACT 1990 PART IV CHP I

COMPANIES ACT 1990 S150(1)

COMPANIES ACT 1990 S150(3)

COMPANIES ACT 1990 S150(2)

LA MOSELLE CLOTHING LTD V SOUALHI 1998 2 ILRM 345

PARAMOUNT AIRWAYS LTD, RE 1992 3 AER 1

INSOLVENCY ACT 1986 S238

COMPANIES ACT 1990 S149

COMPANY LAW ENFORCEMENT ACT 2001 S41

COMPANIES ACT 1990 S150(4A)

COMPANIES ACT 1990 S56

COMPANIES ACT 1990 S56(2)

RSC (NO 4) 1991 SI 278/1991

RSC O.74 r136

RSC O.9 r16

RSC O.9 r2

RSC O.11

JURISDICTION OF COURTS & ENFORCEMENT OF FOREIGN JUDGEMENTS (EUROPEAN COMMUNITIES) ACT 1988

RSC O.11 r11

FUSCO V O'DEA 1994 2 IR 93

RSC O.11 r1

RSC O.11 r12

EAST DONEGAL CO-OPERATIVE LIVESTOCK MART LTD V AG 1970 IR 317

MCKENNA V H (E) 2002 1 IR 72 2002 2 ILRM 117

PROCEEDS OF CRIME ACT 1996

SQUASH (IRL) LTD, RE 2001 3 IR 35

COMPANIES ACT 1990 S150(2)(B)

Synopsis:

COMPANY LAW

Directors

Liquidation - Restriction of directors - Non-resident directors - Whether court jurisdiction in relation to non-resident director - Appropriate provisions as to service - Companies Act 1990, s.150 - Company Law Enforcement Act 2001 (2003/187COS - Finlay-Geoghegan J - 5/6/2003)

Fennell v Norman - [2003] 3 IR 80

Facts The applicant, as liquidator, brought an application for a declaration that directors be restricted in accordance with s. 150 of the Companies Act 1990. Four of the directors were resident in England. The issue before the court was whether the court had jurisdiction to hear an application in relation to a non-resident director and what, if any, were the appropriate provisions as to service in respect of such directors.

Held by Finlay Geoghegan J. in making the declaration of restriction against the four directors that it was the clear intent of the Oireachtas to confer jurisdiction on the court to make declarations in respect of directors irrespective as to where the persons were resident. Service effected by registered post was a sufficient discharge of the court's obligation to ensure that applications were heard in accordance with the principles of constitutional justice.

1 Justice Finlay Geoghegan delivered on the 5th day of June, 2003.

2 On Monday 26 ^th May, 2003,1 heard an application brought by Mr. Ken Fennell as liquidator of Euroking Miracle (Ireland) Limited, ("the Company"), for a declaration that the first four named respondents be restricted in accordance with s. 150 of the Companies Act, 1990. The application as against the fifth-named respondent has been adjourned on consent to permit a replying affidavit to be delivered. The application is brought by originating notice of motion in relation to a voluntary winding up and is therefore a new proceeding. This distinguishes it from similar applications by an official liquidator which are brought by a motion in the existing winding up proceedings.

3 Counsel for the applicant brought to my attention the fact that the first four named respondents are all resident in England and that the Rules of the Superior Courts do not make express provision for the service out of the jurisdiction of an originating notice of motion seeking a declaration pursuant to s. 150 of the Companies Act, 1990. I reserved my decision for the purpose of considering the jurisdiction of this Court to hear such an application in relation to a non-resident director and the appropriate provisions (if any) as to service in respect of such directors.

The Facts:-

4 The applicant was appointed liquidator of the Company by a resolution of the creditors on the 28 ^th February, 2002 pursuant to s. 267 of the Companies Act, 1963. The Company remains in voluntary liquidation and the applicant has certified that, as of the 17 ^th April, 2003, the Company is unable to pay its debts within the meaning of s. 214 of the Companies Act, 1963.

5 The applicant has stated, on affidavit, that each of the five named respondents were directors of the company within twelve months prior to the date of winding up. He exhibits a search from the company's registration office which demonstrates that particulars of directors and secretary of the Company were filed on the 3 ^rd October, 2000 in respect of appointments made effective from the 3 ^rd August 2000 and that, in respect of the particulars registered, the first four named respondents all have given addresses in England.

6 The applicant provided his report to the Director of Corporate Enforcement, pursuant to s. 56 of the Company Law Enforcement Act, 2001, on the 26 ^th November 2002 and, by letter dated the 27 ^th March, 2003, was informed that he was not being relieved of his obligation pursuant to s. 56 (2) of the Act of 2001 to make an application pursuant to the s. 150 of the Act of 1990 for the restriction of all the directors of the Company.

7 The applicant issued an originating notice of motion seeking declarations under s. 150 in respect of each of the respondents and purported to serve same on each of the first four named respondents by having it sent, together with other documents, to such respondents at the addresses filed in the Companies Office by registered post on the 29 ^th April, 2003. An affidavit of service to that effect of Robin McDonnell, Solicitor, sworn on the 21 ^st May, 2003, was filed. In that Affidavit, it is stated that no correspondence was received from the first four named respondents and I was informed by counsel at the hearing on the 26 ^th May, 2003, that no documents had been returned.

Jurisdiction of the Court:

8 The first issue to be considered is whether the Oireachtas, in enacting s. 150 of the Companies Act, 1990, intended to confer jurisdiction on the High Court to make declarations thereunder in respect of directors resident outside of the State or whether the intention was to confine the jurisdiction to making declarations in respect of directors resident in this jurisdiction. I have concluded that the clear intent of the Oireachtas was to confer jurisdiction on the court to make declarations in respect of all persons who were directors of companies to whom s. 150 applies (or who acted as a shadow director in respect of such companies), irrespective of whether such persons are resident within or without the State. I have reached this conclusion from a consideration of the scheme of the Companies Acts, 1963to 2001 and, in particular, Part VII of the Act of 1990 of which s. 150 forms part.

9 It is envisaged that persons of nationalities other than Irish and resident outside of the jurisdiction may become directors of companies incorporated in Ireland or registered in Ireland pursuant to s. 351 of the Act of 1963. The company, the subject matter of this application, was incorporated in Ireland. Any particular considerations which might arise in relation to a company registered here pursuant to s. 351 do not arise in this application. Section 195 of the Act of 1963 obliges every company to keep, at its registered office, a register of its directors which include, inter alia, the directors' usual residential address and nationality. Each company is obliged to furnish to the Registrar of Companies those particulars and any change thereof, pursuant to s. 195 (6). Such notification must be accompanied by a consent signed by the person to act as director (s. 195 (7)).

10 Section 149 (2) of the Act of 1990 provides:-

"This Chapter applies to any person who was a director of a company to which this section applies at the date of, or within twelve months prior to, the commencement of its winding up".

11 It is presumed in Irish law that the operation of a statute is to be confined to the territory of the State unless a contrary intention is evident: Chemical Bank v. McCormack [1983] I.L.R.M 350. It appears to me that the use of the term "any person who was a director" in s. 149 (2) coupled with the purpose and nature of the provisions included in Chapter I of Part VII of the Companies Act, 1990, including s. 150, is evidence of such a contrary intent. The jurisdiction conferred on the court by s. 150 (1), is in the following terms:-

"(1) The Court shall, unless it is satisfied as to any of the matters specified in sub-s. (2), declare that a person to whom this Chapter applies shall not, for a period of five years, be appointed or act in any way, whether directly or indirectly, as a Director or Secretary or be concerned or take part in the promotion or formation of any Company unless it meets the requirements set out in sub-s. (3);......"

12 The requirements specified in sub-s. (3) are that the nominal value of the allotted share capital, paid up in cash of a public limited company be at least the euro equivalent of IR£250,000.00 or for any other company, at least the euro equivalent of IR£50,000.00.

13 Chapter I of Part VII of the Act of 1990 applies to companies which at either the date of the commencement of the winding up, or at any time during the course of the winding up, are certified as unable to pay their debts within the meaning of s. 214 of the Companies Act, 1963....