Johnny Moran v David Hughes Luke Charleton JRM Hotels Ltd ((in Receivership)) and Others v Aspere Property Investments Ltd ((in Receivership))

• Jurisdiction: Ireland
• Judge: Ms. Justice Laffoy
• Judgment Date: 19 November 2013
• Neutral Citation: [2013] IEHC 522
• Court: High Court
• Date: 19 November 2013

[2013] IEHC 522

THE HIGH COURT

[No. 204 COS/2012]

Moran v Hughes & Ors

BETWEEN

JOHNNY MORAN

PLAINTIFF/APPLICANT

AND

DAVID HUGHES LUKE CHARLETON JRM HOTELS LIMITED (IN RECEIVERSHIP) BCGM (IN RECEIVERSHIP) CITYWIDE LEISURE LIMITED (IN RECEIVERSHIP) BLARNEY INN LIMITED (IN RECEIVERSHIP)

AND

ASPERE PROPERTY INVESTMENTS LIMITED (IN RECEIVERSHIP)

DEFENDANTS/RESPONDENTS

COMPANIES ACT 1963 S316

COMPANIES ACT 1963 S319

COMPANIES ACT 1963 S318

COMPANIES ACT 1963 S60

COMPANIES ACT 1963 S214

COMPANIES ACT 1990 S171

COMPANIES ACT 1963 S316(1)

COMPANIES ACT 1963 S316(1A)

KINSELLA v SOMERS UNREP BUDD 23.11.1999 1999/15/4384

HSS (IN RECEIVERSHIP), IN RE UNREP CLARKE 28.10.2011 2011/26/6865 2011 IEHC 497

COMPANIES ACT 1963 S319(1)

COMPANIES ACT 1963 S319(1)(B)

COMPANIES ACT 1963 S320

COMPANIES ACT 1963 S319(2)

IRISH OIL & CAKE MILLS LTD & IRISH OIL AID CAKE MILLS (MANUFACTURING) LTD v DONNELLY UNREP COSTELLO 27.3.1983 1986/6/798

SMITHS LTD v MIDDLETON (NO 1) 1979 3 AER 842

COMPANIES ACT 1948 (UK)

MEDFORTH v BLAKE & ORS 2000 CH 86 1999 3 WLR 922 1999 3 AER 97 1999 BCC 771 1999 2 EGLR 75 1999 AER (D) 546

MOORVIEW DEVELOPMENTS LTD & ORS v FIRST ACTIVE PLC & ORS UNREP CLARKE 6.3.2009 2009/40/9929 2009 IEHC 214

DOWNSVIEW NOMINEES LTD v FIRST CITY CORP LTD 1993 AC 295 1993 2 WLR 86 1993 3 AER 626 1993 BCC 46

B JOHNSON & CO (BUILDERS) LTD, IN RE 1955 CH 634 1955 3 WLR 269 1955 2 AER 775

COMPANIES ACT 1963 S316A

COMPANIES ACT 1963 S318(1)

CONVEYANCING & LAW OF PROPERTY ACT 1881 S24(6)

CITY CAR SALES LTD (IN RECEIVERSHIP & LIQUIDATION), IN RE 1995 1 ILRM 221 1994/8/2285

RED SAIL FROZEN FOODS LTD & ORS (IN RECEIVERSHIP), IN RE 2007 2 IR 361 2006/51/10956 2006 IEHC 328

BOLKIAH v KPMG (A FIRM) 1999 2 AC 222 1999 2 WLR 215 1999 1 AER 517 1999 1 BCLC 1 1999 CLC 175 1999 PNLR 220

RAKUSEN v ELLIS MUNDAY & CLARKE 1912 1 CH 831

O'CARROLL v DIAMOND T/A PAUL F DIAMOND & CO SOLICITORS 2005 4 IR 41 2005 2 ILRM 219 2005/47/9774 2005 IESC 21

Companies - Receivers - Companies Act 1963 - Directions under section 316 of the Companies Act - Unfair prejudice

The applicant, Johnny Moran, was director and secretary of each of the respondent companies. The first and second respondents, David Hughes and Luke Charleton, were joint Receivers of each of the companies. These proceedings were commenced via originating notice of motion, filed in the High Court in April 2012 whereby the applicant sought to apply for various directions under section 316 of the Companies Act 1963 (the 1963 Act) ‘in relation to matters arising in connection with the performance or otherwise by the Receivers…since their disputed appointment on 17 ^th January, 2011’. On the 19 ^th of October, 2012, the applicant swore his fourth affidavit where he summarised eleven directions sought under the 1963 Act. On the 27 ^th of February, 2013, the applicant sought leave by the Court to file an amended notice of motion claiming relief in respect of these eleven directions. The court provided this leave and these proceedings concerned the determination of these directions.

The applicant sought a direction that the Receivers were invalidly appointed; a direction that the Receivers be instructed to put the necessary funds on account for security for costs; a direction to instruct the Receivers to ‘pursue the Bank overcharging on loans’; and a direction that the Receivers seek clarification that loan facilities provided to Aspere and JRM Hotels breached the 1963 Act. The applicant also sought a fifth direction on the conduct and role of Pembroke Hospitality including the Receivers paying out statutory entitlements to two directors, the Receivers paying the security charges due to Concierge Security Limited and direction ‘on appropriate sanction and damages’ to be awarded to the applicant. The sixth direction sought was instruction to the Receivers to ‘comply with their statutory obligations for delivering and filing accounts and statements’. The seventh and eighth directions related to the Receivers”‘interference with and the prevention of the directors carrying out their statutory powers and obligations’ and a direction that the Receivers release requested information. The final directions sought were a direction for remuneration in relation to the receiverships ‘overall lack of performance’ and two directions concerning conflicts of interest.

The Court refused to grant the direction related to validity of appointment as this matter had been dealt with in the Commercial Court. The Court also refused the direction for security for costs as the applicant failed to provide any legal basis for the direction. It was also held that that the Receivers had no authority to pursue the bank for ‘overcharging’ and found no breach of the 1963 Act. The Court also held that the applicant had failed to factually establish any basis for the allegations made under the fifth direction. It was also found that the late filing had not unfairly prejudiced the applicant. The Court considered the seventh and eighth directions together, and found that the Receivers were not obstructing the officers of the respondent companies from performing their statutory duties and that the applicant failed to establish entitlement to the information sought. The Court refused the ninth direction as the applicant failed to produce evidence on the matter. On the final directions sought, the applicant was held to have failed to establish any ground for a finding of conflict.

The Court therefore ordered that all reliefs sought be refused and that the application be dismissed.

1 Judgment of Ms. Justice Laffoy delivered on 19th day of November, 2013.

The parties

2 1. When these proceedings were initiated by originating notice of motion filed on 13 ^th April, 2012, the applicant described himself in the title to the proceedings as director, company secretary and beneficial shareholder of each of the respondent companies. A search in the Companies Registration Office (CRO) establishes that he is in fact a director and the secretary of each of the respondent companies. The first respondent and the second respondent (referred to hereafter collectively as the Receivers) are joint receivers of each of the respondent companies having been appointed by Anglo Irish Bank Corporation Plc (the Bank) to be joint receivers and managers thereover as follows:

3 (a) over the third respondent (JRM), over the fourth respondent (BCGM) and over the fifth respondent (Citywide) by three separate deeds of appointment dated 14 ^th January, 2011, on which acceptance of the appointment by the Receivers was executed on 17 ^th January, 2011, the appointments being pursuant to a Composite Debenture dated 30 June, 2005 made between JRM, Citywide and BCGM of the one part, and the Bank of the other part;

4 (b) over the sixth respondent (Blarney) by a deed of appointment dated 14 ^th January, 2011, on which acceptance of the appointment was executed by the Receivers on 17 ^th January, 2011, the appointment being pursuant to a Debenture dated 30 ^th June, 2008 made between Blarney of the one part and the Bank of the other part; and

5 (c) over the seventh respondent (Aspere) by a deed of appointment dated 1 ^st July, 2011, on which acceptance of the appointment by the Receivers was executed on 5 ^th July, 2011, the appointment being pursuant to a Mortgage Debenture dated 16 ^th June, 2008 made between Aspere of the one part and the Bank of the other part.

6 2. The applicant appeared in person in these proceedings, although he has been legally represented by solicitor and counsel in other proceedings involving the respondents, which will be referred to later.

7 3. The Receivers, who are both accountants, are members of the firm of Ernst &Young. They are represented in these proceedings by Arthur Cox, Solicitors, who also represent them in other proceedings to which there will be reference later.

8 4. As the proceedings have taken up a considerable amount of Court and judicial time, I propose outlining the history of the proceedings in some detail.

History of the proceedings

9 5. As has been noted, the proceedings were commenced by an originating notice of motion which was filed in the High Court on 13 ^th April, 2012. The notice of motion indicated that the applicant was applying for directions under s. 316 of the Companies Act 1963 (the Act of 1963), as amended, "in relation to matters arising in connection with the performance or otherwise by the Receivers … since their disputed appointment on 17 ^th January, 2011". Specifically, in the notice of motion the applicant sought the following six directions, which, in the interests of clarity, will be referred to as Point 1 to Point 6 hereafter:

10 (a) directions under s. 319 of the Act of 1963 in relation to "the failure of the Receivers to comply with delivery of filing of accounts of the Receivers to the Registrar of Companies" (Point 1);

11 (b) directions under s. 316 of the Act of 1963 on "the Receivers' interference with and prevention of the Directors carrying out their statutory powers and obligations" (Point 2);

12 (c) directions under s. 318 of the Act of 1963 to fix the remuneration of the Receivers (Point 3);

13 (d) directions to "deal with the Receivers' refusal to engage or provide any information to the Companies and the Company Directors since their appointment and request for order directing on specific information requests as set out" (Point 4);

14 (e) directions "that the firm and partners of Ernst &Young be removed by the Court as Receivers to the above Companies" (Point 5); and

15 (f) directions "that the firm and partners of Arthur Cox Solicitors be removed as solicitors to the Receivers" (Point 6).

16 6. The application was grounded on the affidavit sworn by the applicant on 13 ^th April, 2012...