Independent Trustee Company Ltd v Registrar of Companies

• Jurisdiction: Ireland
• Judge: Mr. Justice Tony Hunt,
• Judgment Date: 16 January 2015
• Neutral Citation: [2015] IEHC 12
• Court: High Court
• Date: 16 January 2015

[2015] IEHC 12

THE HIGH COURT

Record no. 7479P/2012

Independent Trustee Co Ltd v Registrar of Companies

Between/

Independent Trustee Company Limited

Plaintiff

-and-

Registrar of Companies

Defendant

COMPANIES ACT 1963 S99(1)

COMPANIES ACT 1963 S107(1)

COMPANIES ACT 1963 S107

COMPANIES ACT 1963 S317(1)

BUSINESS COMMUNICATIONS LTD v BAXTER & PARSONS UNREP MURPHY 21.7.1995 1995/6/1869

GOODE PRINCIPLES OF CORPORATE INSOLVENCY LAW 3ED 2005 PARA 6.35

SINCLAIR v WILSON 52 ER 627 1855 20 BEAV 324

BARCLAYS BANK LTD v QUISTCLOSE INVESTMENTS LTD 1970 AC 567 1968 3 WLR 1097 1968 3 AER 651 9 LDAB 105

CARRERAS ROTHMANS LTD v FREEMAN MATHEWS TREASURE LTD (IN LIQUIDATION) 1985 CH 207 1984 3 WLR 1016 1985 1 AER 155 1984 1 BCC 99210 1984 BCLC 420

LEHMAN BROTHERS INTERNATIONAL (EUROPE) (IN ADMINISTRATION), IN RE 2010 BUS LR 489 2010 BCC 272 2010 1 BCLC 496 2009 EWCA CIV 1161

NESTOR v MURPHY 1979 IR 326 1979/12/2065

DPP (IVERS) v MURPHY 1999 1 IR 98 1999 1 ILRM 46 1998/16/5907

INTERPRETATION ACT 2005 S5

COMPANIES ACT 1963 S370(1)

COMPANIES ACT 1963 S323

HOWARD & ORS v CMRS OF PUBLIC WORKS IN IRELAND 1994 1 IR 101

B (D) v MIN FOR HEALTH & HEPATITIS C COMPENSATION TRIBUNAL 2003 3 IR 12 2003/4/812

KADRI v GOVERNOR OF WHEATFIELD PRISON 2012 2 ILRM 392 2012/20/5671 2012 IESC 27

COMPANIES ACT 1963 S109

COMPANIES ACT 1963 S99

COMPANIES ACT 1963 S99(2)(D)

COMPANY LAW

Receivership

Register of companies - Company status - Website - Appointment of receiver pursuant to charge - Application to change company status on register and website - Statutory interpretation - Whether ambiguity in terms "property" or "receiver" - Whether literal interpretation appropriate - Whether change in status on register damaging to company reputation - Whether explanatory note on website adequate - Whether property held in trust constituting property for purpose of Companies Act receivership processes - Howard v Commissioners of Public Works [1994] 1 IR 101; DB v Minister for Justice [2003] 3 IR 12 and Kadri v Governor of Wheatfield Prison [2012] IESC 27, [2012] 2 ILRM 392 applied - Business Communications Ltd v Baxter (Unrep, Murphy J, 21/7/1995); Carreras Rothmans Ltd v Freeman Matthews Treasure Ltd [1985] Ch 207; Nestor v Murphy [1979] 1 IR 326 and DPP (Ivers) v Murphy [1999] 1 IR 98 considered - Sinclair v Watson (1885) 20 Beav 324; Barclay's Bank Ltd v Quistclose Investments Ltd [1970] AC 567 and Re Lehman Brothers International Europe (No 2) [2009] EWCA Civ 1161, [2010] Bus LR 489 distinguished - Companies Act 1963 (No 33), s 99, 107, 317 and 323 - Interpretation Act 2005 (No 23), s 5 - Proceedings dismissed (2012/7479P - Hunt J - 16/1/2015) [2015] IEHC 12

Independent Trustee Company Ltd v Registrar of Companies

Facts: The plaintiff in this case was a limited liability company incorporated in Ireland. The defendant was an officer empowered by statute to conduct and oversee the registration of companies under the Companies Acts 1963 to 2012 (‘the Acts’). The officer was responsible for maintaining and updating the Register (‘the Register’) in relation to any company registered in the State under the Acts. The defendant entered the status of each company into the Register. This was a long-standing practice of the defendant and not a requirement of the Acts. The plaintiff company was a pension provider acting as a trustee for a number of trust funds. As the trustee for each fund, the plaintiff held the legal title to the properties owned by each fund on trust for the beneficiaries. The plaintiff sought an injunction to prevent the defendant from altering the status of the plaintiff on the register of companies from ‘normal,’ a declaration that sections 107(1) and 317(1) of the 1963 Act did not apply to the appointment of the receivers over the property by the lender, an injunction to restrain the defendant from recording a notification from the lender that receivers had been appointed over the property and an injunction to restrain the defendant from publishing or notifying any third party that such notification had been received by it. The defendant contended that the property fell within the provisions of s. 107(1) and s. 317(1) of the 1963 Act and denied that any third party would by misled by the terms used by the defendant in compiling and exhibiting the contents of the Register. The defendant also contended that the interpretation of the relevant statutory provisions suggested by the plaintiff were incorrect.

Held Hunt J: The defendant”s use of status labels was not beyond the power conferred by the Acts. The defendant was obliged to register the appointment of a receiver or any charge on the application of an interested party. The appointment of a liquidator or receiver is indicative of company”s status or well-being. The labels devised and applied by the defendant were of interest to third parties attempting to ascertain the true financial position of a company. However, the court agreed with the plaintiff that the application of a single ‘receivership’ label failed to define the extent of the receivership. It was reasonable to require the defendant to ensure that the information displayed in the Register differentiate between the various states of receivership. The defendant”s explanatory note alerting anyone inspecting the Register of the various ownership possibilities along with an invitation to inspect Form E8 was enough to overcome the plaintiff”s criticism. The court considered the wording of the relevant statutory provisions in order to evaluate the legality of the defendant”s actions. There was no ambiguity in the language used in respect of the term ‘property’ as used in s. 107(1) or the term ‘receiver’ as defined by s. 323 of the 1963 Act. The literal meaning of the words did not result in an absurdity. Instead, it resulted in a comprehensive and harmonious administration of the companies Register and for the registration of charges and appointment of receivers. The court said that to adopt a different approach would interfere with the intention of the Oireachtas. As a result the plaintiff”s claim was dismissed.

1 Judgment of Mr. Justice Tony Hunt, delivered on 16 January 2015.

Facts

2 The facts relevant to the claim in this case were agreed by a joint statement signed on behalf of the parties in June 2014.

3 The plaintiff is a limited liability company incorporated in Ireland. The defendant is an officer established pursuant to statute to conduct and oversee the registration of companies registered under the Companies Acts 1963 to 2012 ("the Acts") and is responsible for maintaining and updating entries in the Register ("the Register") in relation to each company registered in the State under the Acts.

4 Since the introduction by the defendant of an electronic register in about 1991, the defendant creates an entry in the Register with regard to each registered company which is entitled "status" and which records that a company's status is either "normal", "strike off listed", "liquidation", "receivership", "ceased following cross-border merger" or "dissolved", as the case may be.

5 The application of these descriptions to a company is a long-standing practice of the defendant but is not and has not ever been a requirement of the Acts. Prior to 1991, the defendant maintained a hard copy file in respect of each company and applied a sticker indicating the relevant status of the company to the front cover of the hard copy file. No sticker was applied if the company status was normal, and this information was available to the public on inspection of the hard company file.

6 This status description forms part of the company information that is made available free of charge by the defendant, on the company search facility on the website maintained by it (www.cro.ie.). The status description of Irish registered companies is also made available by way of private commercial websites who make use of the proprietary information maintained by the defendant on the Register.

7 The plaintiff company carries on business as a pension provider and acts as the trustee to approximately 2750 unit trust funds. As the trustee of each fund, the plaintiff holds the legal title to the properties owned by each fund on trust for the beneficiaries of such fund.

8 The principal fund operated by the plaintiff is the Delta fund which was established by a Declaration of Trust made in writing by the plaintiff on 2 January 2002 ("the declaration of trust") (as modified by the first supplemental deed to the declaration of trust dated 25 May 2005) in favour of the various unit holders in the Delta fund. The Delta fund is subdivided into a series of several sub-funds which include Delta Fund 704530 ("the sub-fund").

9 Pursuant to clause 2.00 of the declaration of trust, the plaintiff stands possessed of the sub-fund's property upon trust exclusively for the unit holders of the sub-fund. Pursuant to clause 9.00 of the same document, the plaintiff is prohibited from dealing with the assets or property of the sub-fund for its own account unless authorised in writing by the unit holders of the sub-fund.

10 Pursuant to clause 5.10 of the declaration of trust the plaintiff is entitled to discharge from the sub-fund certain disbursements and administration expenses, and pursuant to clause 24.01 the plaintiff is entitled to be paid remuneration and fees out of the assets of the sub-fond. The plaintiff is in fact paid property management fees from rent received in respect of the sub-fund's property, and also uses the rent received to discharge other disbursements, including insurance costs and VAT.

11 By facility letter dated 20 November 2007 ("the facility letter") West Bromwich Commercial Ltd ("the lender") advanced £4,088,000 to the sub-fond to finance the purchase of Gloucester House, 399...