Goode Concrete v CRH Plc & Others (No 3)

• Jurisdiction: Ireland
• Judge: Ms. Justice Laffoy
• Judgment Date: 02 November 2012
• Neutral Citation: [2012] IEHC 439
• Court: High Court
• Date: 02 November 2012

[2012] IEHC 439

THE HIGH COURT

[No. 492 COS/2012]

In re Goode Concrete (In Receivership)

IN THE MATTER OF GOODE CONCRETE (IN RECEIVERSHIP)

AND

IN THE MATTER OF THE COMPANIES ACTS 1963 - 2012

Company Law - Receivership - Competition proceedings - Winding up order - Costs - Client accounts - Companies Acts 1963-2012 - Ulterior motive - Genuine claim

Facts: Good Concrete (the "Company") received a winding up petition from Kilsaran Concrete (the "Petitioner") which was supported by two other creditors as co-defendants. Allied Irish Bank plc ("AIB") was the company's only secured creditor and declined to support the petition. The debt the Petitioner and co-defendants claim arose out of costs from Competition proceedings initiated by the Company against them where it was alleged that various domestic and European competition law had been breached to the detriment of the Company in an effort to eliminate it from the market. In the course of these Competition proceedings, the Company sought an interlocutory injunction to restrain the opposing parties from continuing in any course of action that allegedly breached Competition law. This was rejected with costs awarded in favour of the Petitioner and co-defendants. The proceedings continued regardless. Shortly after the interlocutory injunction application, the Company entered receivership.

The Company submitted a number of reasons in support of their application to dismiss the petition. They averred that the decision to serve a winding up petition was made so that the Petitioner and co-defendants could avoid the consequences of the Competition proceedings which they submit would be successful and would eliminate the debt owed. If the company was placed into liquidation, it would be unlikely the liquidator would continue with proceedings. They further submitted that they intended to seek an extension of time from the Supreme Court to appeal the costs order.

Held by Laffoy J that given the Company's precarious financial position, it would be very unlikely a liquidator would continue with the Competition proceedings to finality due to the lack of assets available. AIB had refused to support the Petitioner's motion because as a secured creditor, they felt there would be more chance of recovering the debt owed to them if the Competition Proceedings were given the best possibility to proceed to finality. These factors allowed the Court to draw an inference that the Petitioner and co-defendants did indeed have an ulterior motive as alleged and therefore, it was decided a winding up order was not appropriate.

It was further held that whilst the court had the option to adjourn the petition pending the outcome of the Competition proceedings, the more appropriate option would be to dismiss the petition. The Company had sought its claim in the Competition list for 2 years, a claim which was genuine, sufficiently related to the petition for a winding up order and would in fact clear the debt to the Petitioner if successful. The diligence of the Company was evident in the fact that they lodged a substantial sum as security for costs. It was therefore not necessary to consider the Company's contention that they intended to appeal the costs order made against them.

Order dismissing the petition.

1 Judgment of Ms. Justice Laffoy delivered on 2nd day of November, 2012.

The petition

2 1. On 3 ^rd September, 2012 Kilsaran Concrete (the Petitioner) presented a petition that Goode Concrete (the Company) be wound up by the Court under the Companies Act 1963 (the Act of 1963). The making of a winding up order was resisted by the Company on a number of grounds which will be outlined later. At the hearing of the petition two creditors, CRH Plc and Roadstone Wood Ltd. (the Co-defendants) were represented by counsel and they supported the petition for the winding up of the Company. Another creditor, Allied Irish Bank Plc (AIB), which is a secured creditor and the Company's largest creditor, which was also represented by counsel, did not support the petition. The stance of other creditors in relation to the petition had obviously been canvassed by Mr. Peter Goode (Mr. Goode), the Managing Director of the Company, and letters from those creditors were exhibited in affidavits filed on behalf of the Company, the contents of which will be outlined later.

3 2. The debt which the Petitioner claims is due to it and which forms the basis of the petition arises out of one aspect of proceedings which are pending in the Competition List in the High Court between the Company, as plaintiff, and the Co-defendants and the Petitioner, as defendants (Record No. 2010/ 10685P) (the Competition Proceedings). It is convenient to consider the course of the Competition Proceedings, insofar as they are relevant, at the outset.

The Competition Proceedings

4 3. In the Competition Proceedings, which were initiated in November 2010, the Company alleges various breaches of domestic competition law (ss. 4 and 5 of the Competition Act 2002) and of European Competition Law (Articles 101 and 102 of the Treaty on the Functioning of the European Union) on the part of the Petitioner and the Co-defendants, including that they engaged in predatory pricing with the aim of eliminating the Company from the ready-mix concrete market and that they engaged in collusive tendering in respect of bids for the supply of ready-mix concrete. In November 2011 the Company sought interlocutory relief against the Petitioner and the Co-defendants in the Competition Proceedings to restrain the Company and the Co-defendants from continuing the alleged anti-competitive practices. By order of the Court made on 20 ^th January, 2011 the Company's application for interlocutory relief was refused and costs of the application were awarded to the Petitioner and the Co-defendants against the plaintiff, the said costs to be taxed in default of agreement.

5 4. The Competition Proceedings have continued to be prosecuted by the Company and the following steps in the process have been brought to the attention of this Court:

6 (a) On 5 ^th April, 2011 the Company delivered a statement of claim in which it sought declaratory relief and damages under various headings, including exemplary damages and aggravated damages.

7 (b) The Petitioner and the Co-defendants applied to Court for an order for security for costs. The Court delivered judgment on 21 ^st March, 2012 ( [2012] IEHC 116), wherein it was stated that the Court proposed to make an order requiring security to be given to both sets of defendants (that is to say the Petitioner and the Co-defendants) by the Company but on a phased basis, the first phase being limited to a sum appropriate to the completion of the exchange of pleadings and the making of discovery on either side, By order of 15 ^th May, 2012, the Court ordered that the security in respect of the first phase be fixed in the amount of €110,000 in respect of the Co-defendants and €85,000 in respect of the Petitioner. The Company has complied with that order, in that the security ordered by the Court in relation to the first phase has been paid into Court within the timeframe set by the Court. In his response to the petition, Mr. Goode has averred that the security was provided by way of a loan from the Goode family to Mr. Tom Goode, the Chairman of the Company.

8 (c) The Competition Proceedings are next listed for case management before the Court on 13 ^th November, 2012. While a defence has not yet been delivered by either the Petitioner or the Co-defendants, it was averred by Mr. Goode on behalf of the Company that it is envisaged that the Competition Proceedings will reach the stage of discovery in early 2013.

The current financial state of the Company

9 5. The Company ceased trading on 16 ^th February, 2011 because, as averred to by Mr. Goode, the position of the Company was extremely precarious, given that it was unable to obtain new concrete tenders and had no prospect of obtaining contracts in the near future, which state of affairs the Company attributes to the actions of the Petitioner and the Co-defendants which are the subject of the Competition Proceedings.

10 6. On 24 ^th June, 2011, AIB appointed David Carson (the Receiver) to be Receiver and Manager of the Company. While the relevant documentation has not been put before the Court, the Court has been informed that the security of AIB on foot of which the Receiver was appointed contains fixed and floating charges on all of the assets of the Company. Mr. Goode has averred that the Company's indebtedness to AIB is in the region of €26m. However, at the hearing of the petition, counsel for AIB clarified the position by informing the Court that the Company's indebtedness to AIB is in the region of €21m, and the Company also owes in the region of €5m to AIB Finance and Leasing Limited. From information obtained by Mr. Goode from the Receiver's firm, Deloitte, he has estimated the value of the assets of the Company as being in the region of €1.4m to €1.55m, the estimated value of land and quarries held by the Company being in the region of €1.2m to €1.35m, the estimated value of other assets (plant, equipment, vehicles and debts due to the Company) being €200,000. It is undoubtedly the case that, as things stand, the Company is hopelessly insolvent.

The Petitioner's debt and its standing to seek a winding up order

11 7. The order of the Court in the Competition Proceedings awarding costs to the Petitioner and the Co-defendants against the Company was not appealed. The costs of the Petitioner were taxed and a certificate of taxation in the sum of €56,763.33 was issued and taken up by the Petitioner on 19 ^th July, 2012. On the same day, 19 ^th July, 2012, solicitors for the Petitioner served notice on the Company...