Keitumetse Motsumi v Anthony J. Fitzpatrick and Another

JudgeMr. Justice Gerard Hogan
Judgment Date26 March 2015
Neutral Citation[2015] IECA 70
CourtCourt of Appeal (Ireland)
Docket Number[C.A. Nos. 15 & 23 of 2015]
Date26 March 2015

[2015] IECA 70


Peart J.

Hogan J.

Mahon J.

No. 15/2015
Motsumi v Fitzpatrick (Liquidator of Eden Further Education Limited) & Hossain





Appeal – Interpretation - Companies Act 1963 - Rules of the Superior Courts (Winding-up of Companies) 2012 – Liquidation – Practice and Procedures – Creditor"s - Voting

Facts: This appeal was concerned with the interpretation of two specific sub-rules contained in Ord. 74 of the Rules of the Superior Courts 1986 (as inserted by the Rules of the Superior Courts (Winding-up of Companies) 2012 (S.I. No. 121 of 2012)) concerning the appointment of a liquidator at a meeting of creditors in a voluntary winding-up. Following the closure of Eden Further Education, numerous international students were unable to complete their courses. The creditor"s meeting was informed that Eden had resolved that it should be wound up as a creditors" voluntary liquidation. It was further proposed that the second respondent, Mr. Fitzpatrick, be appointed as liquidator and that the liquidator should be authorised to make payment of his fees on account pending the conclusion of the winding up.

The present application was commenced by notice of motion dated 6th June 2014. The principal relief claimed was an order pursuant to Ord. 74, r. 71 allowing the appeal of the applicant against the decision of the chairman of the creditors" meeting to disallow certain proofs and to admit certain proofs Donnelly J. had allowed the appeal and directed that Mr. Fitzpatrick be replaced as liquidator by Mr. de Lacey. Both Mr. Hussain and Mr. Fitzpatrick appealed to this Court against that decision.

Held by Justice Hogan in light of the available evidence and submissions presented that the Chairman was wrong in refusing to admit the entirety of the Council"s rates claim, so that an additional sum of €98,846 ought to have been allowed. The claims of the 190 students were properly disallowed for voting purposes by the Chairman at the creditors" meeting. The Court reached that decision in light of the fact that irrespective of that status, there was no mechanism whereby the 'value' of those claims within the meaning of s. 267(3) of the 1963 Act could have been objectively ascertained in the circumstances and for that purpose. Consequently, Justice Hogan allowed the appeal against the order of Donnelly J. and set aside her order. Instead the Court declared that at the meeting of the creditors of the company held on 23rd May 2014 the majority in value of the creditors voting at that meeting voted for the appointment of Mr. Anthony J. Fitzpatrick as liquidator. It follows, accordingly, that Mr. Fitzpatrick should be deemed to have been duly elected as liquidator for that purpose in accordance with s. 267(3) of the 1963 Act (as amended).


1. This is an appeal from the judgment of Donnelly J. in the High Court delivered on 12 th of December 2014. The appeal itself concerns the interpretation of two specific sub¬rules contained in Ord. 74 of the Rules of the Superior Courts 1986 (as inserted by the Rules of the Superior Courts (Winding-up of Companies) 2012 (S.I. No. 121 of 2012)) concerning the appointment of a liquidator at a meeting of creditors in a voluntary winding-up. As will be seen, this exercise also necessarily involves an analysis of the relevant provisions of ss. 266 and 267 of the Companies Act 1963 ("the 1963 Act") and an examination of how these provisions inter-act with the relevant provisions of Ord. 74.


2. It is first necessary to set out the relevant provisions of ss. 266 and 267 of the 1963 Act.

Sections 266 and 267 of the 1963 Act

3. Section 266(1) provides:


"(1) The company shall cause a meeting of the creditors of the company to be summoned for the day, or the day next following the day, on which there is to be held the meeting at which the resolution for voluntary winding up is to be proposed, and shall cause the notices of the said meeting of creditors to be sent by post to the creditors at least 10 days before the date of the said meeting of the company."


4. Section 266(2) provides:

"The company shall cause notice of the meeting of the creditors to be advertised once at least in 2 daily newspapers circulating in the district where the registered office or principal place of business of the company is situate."


5. Section 267(2) provides:

"Where different persons are nominated as liquidator, any director, member or creditor of the company may, within 14 days after the date on which the nomination was made by the creditors, apply to the court for an order either directing that the person nominated as liquidator by the company shall be liquidator instead of or jointly with the person nominated by the creditors, or appointing some other person to be liquidator instead of the person appointed by the creditors."


6. Section 267(3)(as inserted by s. 47 of the Company Law Enforcement Act 2001) provides:

"If at the meeting of creditors mentioned in s. 266(1) a resolution as to the creditor's nominee as liquidator is proposed, it shall be deemed to be passed when a majority, in value, of the creditors present personally or by proxy and voting on the resolution have voted in favour of the resolution."


7. Prior to the change effected by s. 267(3) of the 1963 Act (as amended), Ord. 74, r. 62 required that the creditors' resolution be passed by a majority in both number and value. Section 267(3) now requires that only a simple majority in value of the creditors is required. It will be noted, however, that s. 267(3) refers to creditors simpliciter and no distinction is drawn between creditors with liquidated and unliquidated claims.

Order 74, rr. 68 and 71

8. It is next necessary to set out the relevant provisions of Order 74. Ord. 74 deals with the winding up of companies generally. Part X of Ord. 74 deals with general meetings of creditors and contributories in a winding up by the Court and in a creditors' voluntary winding up. Ord. 74, r. 68 provides as follows:

"A creditor shall not vote in respect of any unliquidated or contingent debt or any debt the value of which is not ascertained, nor shall a creditor vote on any debt on or secured by a current bill of exchange or promissory note held by him unless he is willing to treat the liability to him therein of every person who is liable thereon antecedently to the company and against whom an adjudication ordering bankruptcy has not been made, as security in his hands and to estimate the value thereof, and for the purposes of voting but not for the purpose of dividend, to deduct it from his proof."


9. Ord. 74, r. 71 deals with the admission and rejection of proofs for the purposes of voting at a creditors' voluntary winding up meeting. Ord. 74, r.71 provides that:

"The Chairman should have power to admit or reject a proof for the purposes of voting but his decision shall be subject to appeal to the Court. If he is in doubt whether a proof should be admitted or rejected he shall mark it as objected to and allow the creditors to vote subject to the vote being declared invalid in the event of the objection being sustained".

The background to this appeal

10. We can now turn to consider the background facts to this appeal. The applicant, Ms. Motusmi, is a Botswanian national who enrolled as a student in an undergraduate business administration course which was to be provided by Eden Further Education Ltd. ("Eden"). The course in question actually started in November 2013, although it had been scheduled to start in September 2013. Ms. Motsumi had paid Eden the sum of €2,575 by way of tuition fees in respect of 52 weeks of tuition. Unfortunately for Ms. Motsumi, Eden ceased to trade on 1 st May 2014, with the result that there was still some 26 weeks of tuition outstanding, the benefit of which she was deprived.


11. Regrettably, Ms. Motsumi was by no means the only student in that situation. Nearly all of them were non-EU international students who had paid significant sums to Eden for tuition purposes. There were, however, some institutions who, to their credit, were willing to provide voluntary assistance to these students in their desperate plight. A non-profit organisation, the Irish Council for International Students ("ICIS") - which is a representative and advocacy body for international students - became actively involved in tending to the needs of these students following the abrupt termination of Eden's affairs.


12. An officer of ICIS, Mr. Colin Tannam, availed of specialist advice given under a voluntary assistance programme operated by the Bar Council as to the manner in which a large number of international students could be represented at the creditor's meeting. As a result of this, Mr. Tannam agreed to attend the creditor's meeting on foot of the proxy forms signed by some 216 students.

The issues raised at the creditors' meeting

13. The creditor's meeting itself was held pursuant to the provisions of s. 266 of the 1963 Act on 23 rd May 2014 at a hotel premises in Lucan, Dublin 20. There is, in fact, little disagreement as to what happened at the meeting. The meeting was chaired by the second respondent, Mr. Fakir Hossain, who was a director of Eden. The other director, Mr. Hossain's wife, did not attend the meeting.


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3 cases
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    ...whether it was for rent or mesne rates or a combination of the two. As the Court of Appeal explained in Re: Eden Further Education Ltd. [2015] IECA 70, creditors of a company include those with unliquidated claims, even though under the Companies Acts, 1963 to 2012 there was no mechanism to......
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