Infront Partners spa v Media Partners & Silva Ltd; Re Media Partners and Silva Ltd
| Jurisdiction | Ireland |
| Judge | Mr. Justice Robert Haughton |
| Judgment Date | 15 May 2019 |
| Neutral Citation | [2019] IEHC 318 |
| Court | High Court |
| Docket Number | [2018 No. 18 FJ & 2018 No. 403 COS],Record No: 2018 No. 18 FJ Record No: 2018 No. 403 COS |
| Date | 15 May 2019 |
&
[2019] IEHC 318
Record No: 2018 No. 18 FJ
Record No: 2018 No. 403 COS
THE HIGH COURT
THE COMMERCIAL COURT
Order of garnishee – Winding up – Insolvency – Plaintiff seeking to have a conditional order of garnishee made absolute in order to discharge the debts owed by the defendant to the plaintiff – Whether the defendant should be wound up
Facts: The plaintiff, Infront Partners spa, applied to have a conditional order of garnishee granted by Pilkington J on 23 October 2018 made absolute in order to discharge the debts owed by the defendant company, Media Partners & Silva Ltd, to the plaintiff, to the value of €18,033,014.12 (the garnishee application). The liquidators of M & P Silva Ltd (in liquidation) (the petitioning creditors) – a company registered in the UK but part of a group of companies of which the defendant was one – petitioned to have the defendant company (the company) wound up (the petition). The petitioning creditors were both members of PwC (UK) and were appointed liquidators of M & P Silva Ltd on 19th October 2018. In effect, in the garnishee application the High Court was asked to decide whether a conditional order of garnishee can be made absolute against a company which is insolvent and/or facing an imminent application for winding-up. Having commenced hearing the garnishee application the High Court determined that the petition should be brought into the Commercial Court so that both matters could be heard and determined together.
Held by Haughton J that he accepted as correct the petitioning creditors’ evidence and submissions. He was satisfied that the company was insolvent and should be wound up, and that the conditional order of garnishee should be discharged. However, having regard to the extent of the asserted inter-company debt, proof of which relied primarily on group spreadsheets prepared by group financial staff cooperating with the petitioning creditors, he found that it was preferable in this instance to appoint a liquidator other than an accountant from PwC (Ireland), a sister firm of PwC (UK). He held that this was not because of any suggestion of lack of qualification, professionalism or independence of the proposed liquidator; rather it was because the main task of the liquidator that the High Court appoints will be to verify the validity and extent of the inter-company debt and it was important that the liquidator be perceived to be an entirely independent and disinterested party in order to optimise transparency and impartiality in the process.
Haughton J held that the petitioning creditors had shown sufficient reason for the High Court not to make the conditional order of garnishee absolute; the application to make the conditional order of garnishee absolute was therefore refused, and the conditional order stood discharged. He held that he would appoint a liquidator to the company but would require the submission of alternative name(s). In the meantime, he held that the monies at issue should continue to be held on deposit by AIB.
Application refused.
This combined judgment covers two separate but competing applications. The first is an application by the Plaintiff to have a conditional order of garnishee granted by Ms Justice Pilkington on 23 October 2018 made absolute in order to discharge the debts owed by the Defendant company to the Plaintiff, to the value of €18,033,014.12 (‘the Garnishee application’). The second is a Petition by the liquidators of M & P Silva Limited (in Liquidation) (‘the Petitioning Creditors’) – a company registered in the UK but part of a group of companies of which the Defendant is one – to have the Defendant company (‘the company’) wound up (‘the Petition’). The Petitioning Creditors are both members of PwC (UK) and were appointed liquidators of M & P Silva Limited on 19th October 2018.
In effect, in the Garnishee application the Court has been asked to decide whether a conditional order of garnishee can be made absolute against a company which is insolvent and/or facing an imminent application for winding-up. There is no dispute between the parties that the Garnishee application and conditional order of garnishee came first in time.
Having commenced hearing the Garnishee application the Court determined that the Petition should be brought into the Commercial Court so that both matters could be heard and determined together. Following further written and oral submissions, including brief submissions from certain other creditors of the defendant company supportive of the petition, the court indicated that it would deliver judgment first dealing with the Garnishee application and thereafter with the Petition.
In 2014, the Serie A Professional National League in Italy (‘the League’) began a tender process in which the Plaintiff acted as an advisor. The Plaintiff was given full entitlement to collect sums due to the League on the League's behalf. The Defendant, who is part of a worldwide media group involved in the distribution of television rights associated with various football leagues, was the successful tenderer. The Defendant entered into a contractual relationship with the League, a term of said contract being that they would furnish all payments arising on foot of their agreement with the League to the Plaintiff. The Plaintiff and Defendant also entered into a number of service agreements. The first tranche of agreements were entered into on 4 February, 2016, 4 March, 2016, 10 May, 2016 and 16 May, 2016 to the value of €13,861,254.82. The second agreement related to the costs of the delivery of the assigned audio visual rights and was to the value of €4,171,888.30.
After a default of payment under the said agreements, the Defendant wrote to the Plaintiff by way of letter dated 1 June, 2018, acknowledging their indebtedness and setting out a provisional payment plan. It seems that up until this point there had been a good working relationship between the parties and all sums due and owing were paid when requested. The Plaintiff accepted the proposed payment plan however the Defendant defaulted once more and despite attempts to engage, the Plaintiff was unable to obtain payment for the outstanding debts. The Plaintiff sought, and was granted, two European Orders for Payment (‘EPOs’) from the Court in Milan, the first dated 12 June 2018 in respect of the first tranche of agreements and the second dated 9 May 2018 in relation to the second agreement. The current debt owed to the Plaintiff is €18,033,014.12.
It is of note that in July of 2018, a number of newspaper and media reports surfaced as to the potential insolvency of the Defendant and in October of 2018, petitions for winding up were granted against two companies within the group, those being the Moroccan company on 4 October 2018 and the UK company on 17 October 2018. Both of these winding up petitions received widespread media attention.
On foot of the EPO's, the Plaintiff made an application to Ms Justice Costello on 16 October 2018 seeking various orders in aid of execution. The reliefs sought included a mareva injunction preventing the Defendant from reducing, dissipating, transferring, divesting or distributing its assets below the sum of €18,033,143.12 as well as an order of garnishee pursuant to Order 45, rule 1 of the Rules of the Superior Courts to attach and garnish all sums due and owing on foot of the EPO's to the Defendant. This garnishee was to attach to an Irish AIB bank account, IBAN: IE93AIBK93110107722048, Swift: AIBKIE2D. The Plaintiff was granted these interim orders, including the conditional order of garnishee. The Plaintiff gave an undertaking to the Court not to enforce the garnishee order without further application to the Court.
On 23 October 2018, the Plaintiff applied to Ms Justice Pilkington to continue the mareva and to have a conditional order of garnishee, an order nisi, made by the Court. This application was acceded to and the application for an order of garnishee absolute was made returnable to the 1st November, 2018. Both AIB and the Defendant were served with orders of the Court and put on notice of the application to be made on the return date. On 31 October 2018, the Plaintiff was contacted by the UK Company liquidators seeking confirmation of the garnishee application return date. This was confirmed and counsel appeared for the UK Company liquidators on the return date.
During the course of argument counsel differed somewhat as to what exactly passed between them and Ms. Justice Pilkington on the 1 November, 2018 and the Court indicated that it would review the DAR (Digital Audio Recording) for the application in question. The Court has done so and the following is an accurate summary of what took place:
• When the court sat counsel for the Plaintiff (Mr. Jarlath Ryan BL) indicated that his client was ready to proceed with its application for the conditional garnishee order to be made absolute. It was submitted that the Plaintiff was anxious to proceed with the application that day, that AIB were not objecting and that the matter would take no more than 20 minutes. Counsel then indicated that there was an appearance or ‘semi-appearance’ by Mr (Edward) Farrelly BL for the liquidators of the UK Company and that counsel was undoubtedly intending to apply for some kind of adjournment. Mr. Ryan submitted that this was a matter for the trial judge and that the Garnishee application was urgent.
• Mr Farrelly was then asked to address the Court. He submitted the following:
‘I appear for the liquidators of...
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