Keane v Day

• Jurisdiction: Ireland
• Judge: Mr Justice Max Barrett
• Judgment Date: 29 July 2016
• Neutral Citation: [2016] IEHC 452
• Court: High Court
• Docket Number: [2014 No. 3 COS]
• Date: 29 July 2016

[2016] IEHC 452

THE HIGH COURT

Barrett J.

[2014 No. 3 COS]

IN THE MATTER OF FF COURIERS LIMITED (IN LIQUIDATION)

AND IN THE MATTER OF THE COMPANIES ACTS 1963 TO 2013

AND IN THE MATTER OF AN APPLICATION PURSUANT TO SECTION 286 OF THE COMPANIES ACT 1963 (AS AMENDED)

BETWEEN

THOMAS KEANE

APPLICANT

AND

WILLIAM DAY, STEPHEN FULLER, ALAN FLEMING

RESPONDENTS

Company – S. 268 of the Companies Act, 1963, as amended – Payments made to the director of the company – Repayment of loans – Preference over other creditors – Fraudulent preference – Salary accounted as loan monies

Facts: The liquidator of the company sought a declaration to the effect that certain payments made to the first named respondent, who was the director of that company, during the time of depression of its active operation constituted a fraudulent preference under s. 286 of the Companies Act, 1963, as amended. It was contended that the payments made to the first named respondent was to give preference to the first named respondent in the form of repayment of loan owed to the first named respondent by the company and that such preference was fraudulent. The first named respondent contended that he had perceived the payments to be his salary as the amounts he was getting were modest monthly payments.

Mr Justice Max Barrett refused to grant the declaration sought by the liquidator. The Court held that there was sufficient evidence to succeed the presumption under s. 286(3) of the 1963 Act, as amended, as there was nothing contrary in nature. The Court held that based on the evidence, it was proved that the impugned payments were being made as salary and not with a view to give the first named respondent preference as a creditor over other creditors. The Court held that the first named respondent was getting a very modest amount every month, which he drew, based on the presumption that it was his monthly salary. The Court held that the payments made to the first named respondent were not huge, which could suggest carrying out of any fraudulent practice. The Court held that the tax liabilities arising out of the modest salary were not discharged, but that did not prove that the payments received by the first named respondent were with a view to give preference over the other creditors.

JUDGMENT of Mr Justice Max Barrett delivered on 29th July, 2016.

1 This application arose in the Examiner's List on 17th July. It is a matter that has significant monetary, and perhaps other, implications for Mr Day, the sole man with whom the application made before the court was concerned. Mr Day appeared in person at the hearing of the application. He looked understandably worried, though he spoke steadily and with transparent honesty to the court. It is, of course, a matter of some concern that directors of liquidated companies continue regularly to appear unrepresented in court. That they do so is a consequence of the fact that many of them suffer considerably straitened circumstances after the companies they serve go into liquidation. But a concern must arise as to whether such directors are properly aware of their legal rights when they come before the courts, or in a position to defend themselves adequately against such arguments as may be made against them on behalf of liquidators, skilled professionals who are able invariably, it seems, to afford the offices of counsel versed in law and skilled in advocacy.

2 Here, the liquidator of FF Couriers Limited (in liquidation), a company which entered liquidation on 4th January, 2014, has come to court seeking a declaration that certain payments made to Mr Day by FF Couriers Limited during the waning months of its active operation constitute a fraudulent preference pursuant to s.286 of the...