Interplay Between The MUD Act And Insolvent Development Companies

Author:Ms Kelly O'Hara
Profession:Dillon Eustace
 
FREE EXCERPT

Lee Towers Management Company Limited v Lance Investments Limited (In Liquidation) & Ors [2018] IEHC 444

A recent High Court case, Lee Towers Management Company Limited v Lance Investments Limited (In Liquidation) & Ors serves as a helpful reminder of the extensive statutory rights now available to both unit owners and owners' management companies under the Multi-Unit Developments Act 2011 (the "MUD Act") to help with the running of multi-unit developments. It also highlights limitations in enforcing such rights against insolvent companies. In this case, the High Court rejected an argument by an owners' management company that the liquidator of an insolvent development company could be compelled to carry out remedial works to the common areas of a multi-unit development ahead of paying the preferential and other creditors of the company.

Background

Lance Investments Limited and Lance Holmes Limited (the "Companies") developed the apartment complex known as Lee Towers in Cork in and around 2001 and established Lee Towers Management Company Limited (the "OMC") to take title to (and responsibility for) the common areas of the apartment complex. The title to the common areas was never transferred to the OMC and the Companies were wound up by order of the High Court in May 2010 on foot of a petition of the Revenue Commissioners.

Various defects subsequently came to light in the apartment complex and the OMC obtained leave of the High Court in 2014 to issue Circuit Court proceedings against the Companies (In Liquidation) under s. 24 of the MUD Act to, amongst other things, seek to compel the Companies to remedy the defects.

Circuit Court decision

In July 2017, the Circuit Court made the remedial orders requested under s.24(5) of the MUD Act and ordered the Companies to:

  1. carry out various remedial works to the common areas of the apartment complex to comply with planning permission and building control; and

  2. reimburse monies already spent by the OMC on repair of the common areas.

The Circuit Court also ordered the Companies to transfer the common areas of the apartment complex to the OMC. As the Companies were grossly insolvent, the liquidator of the Companies did not comply with the Circuit Court's orders.

High Court decision

In seeking to enforce the remedial orders of the Circuit Court, the OMC argued that the making of an order under s. 24 of the MUD Act displaces the statutory scheme of payments on liquidation and provides the OMC with a...

To continue reading

REQUEST YOUR TRIAL