Knocklofty House Hotel Ltd ((in Liquidation)) and Eccleshall Ltd ((in Liquidation)) and the Companies Acts 1963 to 1990. Frank Kelly v Patrick O'Keeffe and Angela Joyce O'Keeffe

• Jurisdiction: Ireland
• Judge: MS. JUSTICE FINLAY GEOGHEGAN
• Judgment Date: 05 April 2005
• Neutral Citation: [2005] IEHC 105
• Docket Number: 6118P/1992,[1992 No. 6118P]
• Court: High Court
• Date: 05 April 2005

[2005] IEHC 105

THE HIGH COURT

6118P/1992

KNOCKLOFTY HOUSE HOTEL LTD & ECCLESHALL LTD, IN RE

DUBLIN

IN THE MATTER OF KNOCKLOFTY HOUSE HOTEL LIMITED (IN LIQUIDATION) AND IN THE MATTER OF THE COMPANIES ACT 1963- 1990

and

IN THE MATTER OF ECCLESHALL LIMITED (IN LIQUIDATION) AND IN THE MATTER OF THE COMPANIES ACT 1963- 1990

COMPANIES ACT 1990 S150

DUNLECKNEY, IN RE UNREP CARROLL 18.2.1999 1999/10/2397

PRIMOR PLC v STOKES KENNEDY CROWLEY 1996 2 IR 459

DUIGNAN v CARWAY 2001 4 IR 550

COMPANY LAW

directors

Restriction - Delay - Whether delay inordinate and inexcusable - Whether balance of justice favoured dismissing application - Companies Act 1990 (No 33), s 150 - Application dismissed (1992/6118P - Finlay-Geoghegan - 5/4/2005) [2005] IEHC 105

KNOCKLOFTY HOUSE HOTEL LTD & ECCLESHALL LTD, IN RE

The two companies whilst in separate liquidation proceedings were related companies in the sense of having directors who were common to each and also shareholders in common. The official liquidator was appointed to the companies in 1992 and 1993 respectively. In 2004 the liquidator applied for declarations of restriction pursuant to s. 150 of the Companies Act 1990. The respondents applied for orders dismissing the applications by reason of delay in bringing the matter before the court.

Held by Finlay Geoghegan J. in dismissing the applications as against the two respondents that on the particular facts of the case the balance of justice was against proceeding with the application. The respondents commenced a new business about five years ago and this was a reasonable time at which the directors should have been able to put behind them the consequences of the original liquidations and the threat of declarations of restriction would interfere with their ability to conduct their present business.

Reporter: R.W.

1 EX-TEMPORE JUDGMENT OF MS. JUSTICE FINLAY GEOGHEGANON TUESDAY, 5 APRIL 2005

MS. JUSTICE FINLAY GEOGHEGAN DELIVERED JUDGMENT, AS FOLLOWS, ON TUESDAY, 5 APRIL 2005:

2 These are two applications brought by Mr. Frank Kelly who is the official liquidator of each of Knocklofty House Hotel Limited and Eccleshall Limited pursuant to Section 150 of the Companies Act 1990. The two companies, whilst in separate liquidation proceedings, are related companies in the sense of having directors who are common to each and also shareholders in common. The first two named respondents whom I will refer to as Mr. and Mrs. O'Keeffe were the respondents to this application.

3 The official liquidator was appointed to Knocklofty House Hotel Limited by order of the High Court on 19 October 1992 and subsequently to Eccleshall Limited by order of 15 February 1993. These applications were brought pursuant to motions which were issued on 26 February 2004.

4 On behalf of the respondents, it is accepted that they were directors of each of the companies within 12 months prior to the date of the commencement of the winding up, and whilst some submissions were made, it is essentially accepted that the companies are insolvent, and accordingly that Section 150applies to the companies and to the respondents.

5 Section 150 of the 1990 Act came into force on 1 August 1991. on behalf of the official liquidator, it is properly accepted by counsel on his behalf that having regard to the decision of Carroll J. in the matter of Dunlechney Limited, (unreported the High Court, 18 February 1999) that the relevant conduct in respect of which the directors must establish to the court for the purposes of Section 150 that they acted honestly and responsibly, is the conduct of the affairs of these companies from 1 August 1991.

6 The first issue that I must deal with is in effect an application on behalf of the respondents to refuse to entertain these applications or to dismiss them by reason of the delay in bringing this matter before the court.

7 Prior to dealing with the relevant principles, it must be observed that section 150 as enacted in 1990 applies to these applications, and in that form, whilst it imposed a mandatory obligation on the High Court to make declarations of restrictions in respect of persons to whom the section applied, unless they satisfied the court of certain matters, it made no express provision for the manner in which such applications were to be brought before the HighCourt.

8 Having regard to that lacuna, Mr. Justice Francis Murphy in the early 1990s made a practice direction in relation to compulsory liquidations such as these directing that official liquidators should bring a motion in all such liquidations before the court in respect of companies to which Section 150 applied. Whilst, it is important to note this fact, the official liquidator in these liquidations was not under either any statutory obligation nor any even regulatory express obligation to bring this application or these applications before the court.

9 There is no dispute between the parties as to the relevant principles in relation to the delay. They are as set out by the Supreme Court in Primor Plc -v- Stokes Kennedy Crowley [1996], 2IR459 and none applied to applications under Section 150 in the judgment of Fennelly J. in Duignan -v- Carway [2001], 4IR/550.

10 The principles as summarised by Hamilton CJ in Primor Plcare set out at page 560 in the...