Kanwell Developments Ltd v Salthill Properties Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Clarke
• Judgment Date: 11 January 2008
• Neutral Citation: [2008] IEHC 3
• Court: High Court
• Date: 11 January 2008

Kanwell Developments Ltd v Salthill Properties Ltd

BETWEEN

KANWELL DEVELOPMENTS LTD

PLAINTIFFS

AND

SALTHILL PROPERTIES LTD (IN RECEIVERSHIP)

DEFENDANTS

AND

IN THE MATTER OF PORTERRIDGE TRADING LTD

AND

IN THE MATTER OF THE COMPANIES ACTS 1963 - 2006

[2008] IEHC 3

[No. 1125 S/2003]

[No. 383 COS/2007]

THE HIGH COURT

COMPANY LAW

Winding up

Practice and procedure - Petition - Order nisi of garnishee - Competing winding up petition and garnishee application in respect of same sum - Prima facie entitlement of petitioner and applicant - Whether petition bona fide - Whether garnishee application bona fide - Whether material non-disclosure in ex parte garnishee application - Materiality of facts not disclosed - Extent of culpability - Overall circumstances of case - Ex parte application affecting rights and obligations - Discretion of court in garnishee application - Materiality to be considered objectively - Substantive nature of garnishee order nisi - Ordinary position that prior petition to wind up company takes precedence over subsequent garnishee application - Whether equity should alter ordinary position - Where equities equal first in time prevails - Whether claim against receiver in capacity of receiver analogous to cross claim - Whether justice of case met by postponement - Bambrick v Cobley [2006] ILRM 81 and Joyce v Wellingford Construction [2005] IEHC 392, (Unrep, Clarke J, 17/11/2005) considered - Companies Act 1963 (No 33), s 220(2) - Petition adjourned with liberty to apply and order nisi discharged (2003/1125S - Clarke J - 11/1/2008) [2008] IEHC 3

Kanwell Developments Ltd v Salthill Properties Ltd

These two connected proceedings formed part of the extensive litigation that stemmed from the collapse of the Cunningham Group of companies by the appointment by First Active plc of a receiver. The first proceedings involved an application in respect of the appointment of a garnishee over certain debts. The issues were whether there was any sufficient act of non-disclosure on the occasion of an ex parte application and whether an absolute order of garnishee should be made. The second proceedings involved a petition seeking to have the company wound up by the Court. The sum due and owing which formed the basis of the petition was the same sum as was at the heart of the garnishee application.

Held by Clarke J. that the appropriate course was to adjourn further consideration of the petition until such time as the substantive proceedings had reached a stage which allowed for a determination of the position. So far as the garnishee was concerned, the failure to disclose was not deliberate or significantly culpable. However, the winding up petition should take precedence over the garnishee application.

Reporter: R.W.

SALTHILL PROPERTIES LTD, RE UNREP LAFFOY 30.7.2004 2004/46/10491

SALTHILL PROPERTIES LTD (IN RECEIVERSHIP) UNREP MCCRACKEN 29.5.2006 2006 IESC 35

COMPANIES ACT 2004

HALSBURY'S LAWS OF ENGLAND 4ED VOL 17 PARA 535

BAMBRICK v COBLEY 2006 1 ILRM 81 2005/3/573

COMPANIES ACT 1963 S220(2)

JOYCE v WELLINGFORD CONSTRUCTION LTD & ORS UNREP CLARKE 2005/32/6720 2005 IEHC 392

1. Introduction

2 2 1.1 These two connected matters form part of the extensive litigation ("the substantive proceedings") that has stemmed from the collapse of the Cunningham Group of companies by the appointment by First Active plc ("First Active") of a receiver, Mr Ray Jackson ("Mr Jackson"). A significant number of different associated cases have been under case management for some time and are now nearing the stage of trial. However, two discreet issues have arisen in the above entitled proceedings which, although in one sense generally connected with the broad issues which arise in the substantive proceedings, are nonetheless, at one level, independent of the those proceedings. As will become clear the issues which arise in the above two proceedings are connected.

3 3 1.2 In substance the first above named proceedings ("The Kanwell Proceedings") involve an application in respect of the appointment of a garnishee over certain debts. The second above named proceedings ("The Porterridge Petition") involves a petition seeking to have the company named in the title thereof ("Porterridge") wound up by the court.

4 4 1.3 As will become clear there is an indirect connection between the two proceedings and, for that reason, both were heard together. This judgment is directed towards the issues which arise in both cases.

5 5 1.4 In those rather complicated circumstances it is, perhaps, appropriate to start by a brief description of the issues which were before the court in the respective proceedings before going on to describe, in somewhat more detail, the relevant facts. I turn first to the Kanwell proceedings.

2. The Kanwell Proceedings - The Issues

2 2 2.1 On the 26th of November of last year the plaintiffs in those proceedings ("Kanwell") made an ex parte application to this Court (Peart J.) for an order nisi of garnishee. That application was successful. The application was based upon the fact that Kanwell had already obtained judgment in these proceedings against the defendant ("Salthill") on the 22nd of October, 2003 for the sum of €5,229,000 and costs. In separate proceedings, being those bearing Record No. 2004/23 COS entitled "In the Matter of Salthill Properties Ltd and in the Matter of the Companies Act, 1963 - 2001", and in an appeal arising out of those separate High Court proceedings which bore Supreme Court Record No. 492/2004, it was said that sum of €108,505.09 was due by Porterridge to Salthill arising out of costs orders made in both courts ("the 2004 Companies Act application").

3 3 2.2 The order nisi required the Secretary of Porterridge to attend before this Court on the 29th of November, to show cause why Porterridge should not pay to Kanwell the relevant sum of €108,505.09. Thereafter, two applications came before me. The first was the return date to that order nisi of garnishee on which Kanwell sought to have made absolute the order of Peart J.. The second application was brought on behalf of Salthill (through Mr Jackson as receiver) which sought that the order nisi be discharged on the grounds of what was alleged to be material nondisclosure in the course of the ex parte application before Peart J.

4 4 2.3 In this matter there are, therefore, two issues. The first is as to whether there was any or any sufficient act of nondisclosure on the part of Kanwell on the occasion of the ex parte application to warrant, in all the circumstances of the case, the discharge of the order nisi of garnishee. In the event that the order nisi is not so discharged the second issue is as to whether an absolute order of garnishee should be made. In order to fully understand the basis upon which the receiver opposed, in the event that the order nisi was not discharged, the making absolute of the order nisi, it is necessary also to understand the issues which arise in the Porterridge petition and the factual interconnection between the two cases. I, therefore, turn first to the issues which arise in the Porterridge petition.

3. The Porterridge Petition - The Issues

2 2 3.1 On the 25th of September, 2007, Salthill, acting through Mr Jackson as receiver, petitioned this court for the winding up of Porterridge. The stated basis for the winding up was an assertion that Porterridge was insolvent and unable to pay its debts. That assertion was made in the context of the fact that a sum of €108,505.09 was stated to be due by Porterridge to Salthill, to have been demanded, and that a period of more than three weeks was said to have elapsed since the demands were made during which Porterridge was said to have neglected to satisfy the demands in whole or in part.

3 3 3.2 It is clear that the sum due to Salthill which forms the basis for the petition is the same sum as is at the heart of the garnishee application. That sum amounts to the costs awarded in respect of the 2004 Companies Act application to which I have referred which have now been taxed and ascertained together with interest on the sums so taxed and ascertained.

4 4 3.3 It is not contested but that the sum is due and owing, and to understand the basis upon which the petition is resisted by Porterridge it is necessary to say a little more about the background facts to both of these applications.

4. Background Facts

2 2 4.1 As indicated earlier there has been a complex series of actions maintained by various companies under the control of Mr Cunningham arising out of the collapse of the Cunningham Group by reason of the appointment by First Active of Mr Jackson as receiver. Amongst those cases was the 2004 Companies Act application which was, in substance, an application for directions on the part of Mr Jackson as receiver concerning priorities relating to properties in Galway in which Salthill had an interest. It is unnecessary to refer further to the details of the issues which arose in that application for the purposes of this judgment. Suffice it to say that certain cost orders were made both by this Court (Laffoy J.) and by the Supreme Court to the effect that the petitioner should recover costs against Porterridge, such costs to be taxed in default of agreement.

3 3 4.2 I should, in passing, note that immediately before the hearing of these two matters commenced before me, counsel for Mr Jackson quite properly brought to my attention the fact that the form of the relevant orders for costs made, indicated that the costs might be due to Mr Jackson as receiver rather than to Salthill, being the company of which he was receiver. It was indicated that the orders might be in error in that regard. In those circumstances I gave all sides an opportunity to consider the point that had...