Independent Trustee Company Ltd v Registrar of Companies
| Jurisdiction | Ireland |
| Judge | Ms. Justice Finlay Geoghegan |
| Judgment Date | 13 October 2016 |
| Neutral Citation | [2016] IECA 274 |
| Docket Number | Appeal No. 2015/165 |
| Court | Court of Appeal (Ireland) |
| Date | 13 October 2016 |
[2016] IECA 274
THE COURT OF APPEAL
Finlay Geoghegan J.
Finlay Geoghegan J.
Peart J.
Hogan J.
Appeal No. 2015/165
Companies – Appointment of receivers – Injunctions – Appellant seeking injunctions restraining the alteration by the respondent, of its status and recording that notification had been received from the lender that receivers had been appointed over property – Whether respondent is given administrative discretion in the manner in which information is organised on the register
Facts: The appellant, Independent Trustee Company Ltd, in the High Court sought injunctions restraining the alteration by the respondent, the Registrar of Companies, of its status from “normal” and recording on the Register of Companies that notification had been received from the lender, West Bromwich Commercial Ltd, that receivers had been appointed over property, namely Gloucester House, Silbury Boulevard, Milton Keynes, England. It also sought declarations that ss. 107(1) and 317(1) of the Companies Act 1963 did not apply to the appointment of the receivers over the property. On the 16th January, 2015, the trial judge (Hunt J) dismissed all the claims. He held that the appellant held an interest in the property susceptible to the provisions of s. 99(1) of the 1963 Act; that s. 107(1) applied to the appointment of the receivers over the property and that s. 370(1) applied notwithstanding that the appellant was only the legal owner of the property and held it on trust for the unit holders of the sub-fund, Delta Fund 704530, a subdivision of the Delta Fund established by a declaration of trust made on the 2nd January, 2002, and later modified. The trial judge also decided that the respondent was not acting in excess of the powers granted her by the Companies Acts in applying a “status label” to a company. The appellant appealed to the Court of Appeal against the High Court judgment, focusing on the alleged error of the trial judge in deciding that the respondents practice of recording the “status” of a company is not ultra vires her powers and that even if intra vires the designation “receivership” does not accurately represent the position in relation to the appellant in this case. The appellant also contended that the trial judge was in error in his construction of ss. 99, 107(1) and 317(1) of the 1963 Act.
Held by Finlay Geoghegan J that the respondent has the statutory power and duty to organise the information on the electronic Register (and the paper Register if that is applicable) in a clear, organised and accessible manner and is given some administrative discretion in the manner in which that is undertaken. Finlay Geoghegan J held that the respondent is authorised to summarise in a clear way the fact of notifications including that of the appointment of a receiver to all or part of the property of a company (including that of which it is the legal owner and holds on trust) and in the summary to direct a person to the form of notification for the relevant details. Finlay Geoghegan J held that it is, however, impermissible to do so in a manner which implies that an appointment of a receiver to property of a company causes a change or a pending inevitable change in the status of the company.
Finlay Geoghegan J held that the appeal should be allowed in part; the respondent remained entitled to file the E8 received in respect of the receivers appointed over the property of the plaintiff, but was not permitted to change the “status” of the appellant from “normal” to “receivership”. Finlay Geoghegan J proposed that the Court should hear the parties as to the precise form of relief in accordance with this judgment.
Appeal allowed in part.
This appeal primarily concerns the power of the Registrar of Companies, the respondent, to record on the publicly accessible electronic Register maintained by her the status of a company as ‘receivership’ where a notice is received that a receiver has been appointed over property of which the company is the legal owner and which it holds on trust for third parties. It also concerns the proper construction of ss. 99(1), 107(1) and 317(1) of the Companies Act 1963 (now ss. 409, 436(1) and (4), 29(1) of the Companies Act 2014) and their application to property of which a company is the legal owner but holds on trust for third parties.
The parties agreed a statement of facts for the hearing of the case before the High Court, relied upon and recited by the trial judge. In summary, they are as follows.
The respondent is the officer appointed pursuant s.368 of the 1963 Act to conduct and oversee the registration of companies under the Companies Acts. As part of the duty the respondent is responsible for maintaining and updating entries in the Register of Companies (The ‘Register’).
An electronic Register was created in 1991. In the electronic Register the respondent created entries for each company entitled ‘status’, in one of the following terms, ‘normal’, ‘strike off listed’, ‘liquidation’, ‘receivership’, ‘ceased following cross-border merger’ or ‘dissolved’. The application of these descriptions is a long standing practice, but it is not a requirement of the Companies Acts. The status descriptions are available free of charge to the public and accessible from the Companies Registration Office website (www.cro.ie).
The appellant is a pension provider and acts as the trustee to approximately 2,750 unit trust funds. As trustee the appellant holds the legal title to the properties owned by each fund on trust for the beneficiaries of such fund.
The fund relevant to this case is the Delta Fund, established by a declaration of trust made on the 2nd January, 2002, and later modified. The Delta Fund is subdivided into a series of sub-funds including Delta Fund 704530 (the ‘sub-fund’) which this case is concerned with.
Pursuant to the declaration of trust, the appellant stands possessed of the sub-fund's property on trust for the unit holders of the sub-fund. Clause 9.00 of the declaration of trust prohibits the appellant from dealing in the assets or property of the sub-fund on its own account unless authorised to do so by the unit holders of the sub-fund. The provisions of the declaration entitles the appellant to discharge from the sub-fund disbursements and administration expenses, and to be paid remuneration and fees out of the assets of the sub-fund. The appellant is paid property management fees from the rent received from the sub-fund's property from which disbursements are also discharged.
By facility letter dated 20th November, 2007, West Bromwich Commercial Limited (the ‘lender’) advanced a loan facility of £4,088,000.00 to the sub-fund to finance the purchase of Gloucester House, Silbury Boulevard, Milton Keynes, England (the ‘property’). The lender's recourse for the loan was limited to the assets of the sub-fund together with the security outlined therein.
By deed of legal charge dated 16th April 2008 between the appellant as trustee of the sub-fund and the lender a fixed charge was created over the legal and beneficial interest in the property. Under its terms the lender was entitled to appoint a receiver over a secured asset upon an event of default specified in the deed. The respondent was notified of the creation of this charge pursuant to s. 99(1) of the 1963 Act and recorded and registered the charge in respect of the appellant.
In June, 2011, the lender asserted that an event of default had occurred when the maximum loan-to-value ratio between the property and the loan had been exceeded. The lender appointed two receivers over the property. The receivers' appointment was limited only to the Property and did not relate to any of the other assets of the sub-fund or the assets of the appellant.
In July, 2011, the lender lodged an E8 form notifying the respondent of the appointment of the receivers, in compliance with the obligations set out in s. 107(1) of the 1963 Act. The lender then placed a notice in ‘The Irish Times’ of the receivers' appointment over the property and also referred to the appellant as being ‘in receivership’. The placing of the advertisement caused concern to the appellant's customers and creditors such that it considered it necessary to issue a corrective statement to its creditors and the press.
When an E8 form is received by the respondent it is recorded on the Register as a ‘received’ submission against the company to which it relates. On processing the E8 form, a staff member of the Register checks to ensure that the charge under which the receiver is appointed is registered in respect of the company concerned and that the form is fully completed, signed and dated. The form is then registered, and the respondent's computer system automatically changes the company's status to ‘Receivership’.
The E8 in relation to the appointment by the lender of the receivers over the Property was received by the respondent on 7th July, 2011, and recorded as ‘received’ in respect of the appellant. Following contact from the appellant's solicitor on 11th July and correspondence objecting to the registration of the form E8 supported by counsel's opinion the respondent wrote to the Lender's solicitors who presented the form E8 asking if they wished to withdraw this form,. This they declined to do by letter of 11th October, 2011, stating:
‘It is our understanding that the company holds the legal ownership of the asset in question but does not hold the beneficial interest. Section 107(1) in our view is clear in its terms and requires a filing to be made where a receiver is appointed over the property of a...
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