Irish Asphalt Ltd & Companies Act 2014 (No.2)
| Jurisdiction | Ireland |
| Judge | Mr. Justice Tony O'Connor |
| Judgment Date | 04 October 2017 |
| Neutral Citation | [2017] IEHC 555 |
| Docket Number | [2017 No. 58 COS] |
| Court | High Court |
| Date | 04 October 2017 |
IN THE MATTER OF IRISH ASPHALT LIMITED
AND IN THE MATTER OF THE COMPANIES ACT 2014
[2017] IEHC 555
[2017 No. 58 COS]
THE HIGH COURT
Company – The Companies Act 2014 – Mitigation of litigation advantage – Lack of supervision of insolvent company – Supervision by Court.
Facts: The key issue in the present proceedings was whether the litigation advantages for the petitioner in the deceit proceedings could be eliminated or minimised. The petitioner and the liquidator had presented various measures before the Court in order to minimise the litigation advantages.
Mr. Justice Tony O'Connor held that the parties were unable to present the sufficient mitigation measures. The Court held that the loss of the opportunity to a company to defend itself in a complex trial was a serious issue. The Court granted liberty to any party to re-enter the petition within the stipulated time and file affidavits accordingly. The Court held that it would observe the lack of supervision of the insolvent company by giving further directions. The Court also stated that the undertakings given by the directors of the insolvent company and other interested company would continue.
This Court's judgment delivered on the 31st July 2017, [2017] IEHC 524, (' the first judgment'), at paragraph 64 outlined the revised directions which were devised to enable the Court to decide on whether the litigation advantages for the petitioner in the Deceit proceedings could be eliminated or minimised.
The 12th September 2017 date for oral submissions was changed initially to facilitate a duty judge roster change and then moved to the afternoon of the first day of Michaelmas term being Monday, the 2nd October 2017. This latter alteration was granted to allow for mediation, which was unsuccessful according to the confirmation given to this Court's registrar last Friday afternoon. The hearings leading to this judgment ended yesterday evening.
All of the terms and abbreviations in the first judgment are adopted in this judgment, (' the second judgment').
The onus on JECL, having rightfully acknowledged an advantage in the Deceit proceedings from the making of a winding up order, is to assist the Court to establish equity, fairness and justice between the parties in the Deceit proceedings. The parties at the hearing of this petition and this Court, recognised at various stages as probable the decision of a liquidator not to defend the Deceit proceedings on behalf of IAL. Nevertheless, it has to be stressed that such an assumption does not preclude a liquidator from making a decision to the contrary in the future.
The following is a summary of the offers made on behalf of JECL to minimise disadvantages to the defendants in the Deceit proceedings.
(i) JECL is prepared to undertake in reply to the specific minimum requirements set out at paragraph 3.04 of the written submissions dated the 31st August 2017 delivered on behalf of the other Defendants:
(a) not to apply for a default judgment against IAL prior to the delivery of judgment in the Deceit proceedings or their earlier resolution;
(b) to apply without delay for the automatic stay of the Deceit proceedings to be vacated pursuant to Section 678 of the 2014 Act;
(c) to oppose any attempt to adjourn the commencement of the trial in the Deceit proceedings due to commence on the 14th November 2017;
(d) to copy all communications between JECL and its representatives of the one part with a liquidator of IAL or the liquidator's representatives on the other part relating to the litigation and liquidation.
(ii) JECL on Tuesday, the 3rd October 2017, through its solicitor's affidavit sworn on the 3rd October 2017, confirmed to this Court that it will discharge the fees of a liquidator to prepare for and attend at the application under Section 678 of the 2014 Act. This is in addition to JECL's earlier agreement to discharge estimated liquidator's fees of €25,000 plus VAT to include a Section 682 investigation and report to the DCE along with potential director restriction application legal fees of €10,000 plus VAT. Those latter details emerged in anticipation of the hearing which commenced on the 2nd October 2017.
Contribution Claim
It was submitted on behalf of the other Defendants that:
'Hitherto IAL, its current former directors and its former holding company have shared a common interest in defending the reputations against very serious allegations. A liquidator has no such interest. His exclusive interest is in the gathering in and distribution of the company's assets'.
The submissions continued to suggest that a liquidator might pursue a claim for contribution against the other Defendants. This suggestion does not stand up to scrutiny and was not actively pursued in the oral submissions. Suffice to say, the parties and the Court are more recently working on the assumption that a liquidator of IAL is unlikely to participate in the Deceit proceedings. Moreover, if such a scenario arose it begs questions about the sincerity of positions advanced on behalf of all of the parties other than JECL to date.
Availability of Witnesses
The submissions about the availability of experts and witnesses identified by IAL were made without any concrete evidence that those experts or witnesses will not be available to the other Defendants for the trial of the Deceit proceedings. Mr. MacCann for the other Defendants, when asked to elaborate, confined his submission in the following way: ' It doesn't follow as night follows day that if the witnesses are willing to give evidence on behalf [of IAL] that they will in fact be permitted to give evidence' by the liquidator.
In the end this Court is unable to determine the somewhat speculative argument that essential expert witnesses will not be available to the...
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