Macks Bakeries Ltd v O'Connor

• Jurisdiction: Ireland
• Judge: Mr Justice Kelly
• Judgment Date: 09 April 2003
• Neutral Citation: [2003] IEHC 2
• Date: 09 April 2003
• Docket Number: [2003 No. 124 Cos]
• Court: High Court

[2003] IEHC 2

THE HIGH COURT

2003 No.124cos

MACKS BAKERIES LTD (IN LIQUIDATION) & LUBY v. O'CONNOR T/A P O'CONNOR & SONS SOLICITORS

IN THE MATTER OF MACKS BAKERIES LIMITED (IN VOLUNTARY LIQUIDATION)

AND IN THE MATTER OF THE COMPANIES ACTS, 1963–2001

BETWEEN

MACKS BAKERIES LIMITED (IN VOLUNTARY LIQUIDATION)and JAMES LUBY

Applicants

and

PATRICK O'CONNOR PRACTISING AS P O'CONNOR & SONS SOLICITORS

Respondent

Citations:

COMPANIES ACT 1963 S244(A)

INSOLVENCY ACT 1986 S246

LYNCH CORPORATE INSOLVENCY LAW & PRACTICE 1994 PARA 7.24

GALDAN PROPERTIES LTD (IN LIQUIDATION), RE 1998 IR 213

COMPANIES ACT 1963 S284(1)

BANKRUPTCY ACT 1988 S3(1)

KELLY V SCALES 1994 1 ILRM 42

MIN INDUSTRY V HALES 1967 IR 50

Synopsis:

LIQUIDATION

Lien

Statutory interpretation - Company law - Liquidated company's documents held by solicitor as security for fees owed by company - Whether solicitor entitled to assert lien over liquidated company's documents - Companies Act, 1963, section 244(A) - Bankruptcy Act, 1988, section 3(1) (124COS - Kelly J - 09/04/2003)

Macks Bakeries Ltd (in liquidation) v O'Connor - [2003] 2 IR 396 - [2003] 2 ILRM 75

the second applicant was appointed liquidator of the first respondent company. He requested certain documents which had come into the respondent's possession as solicitor for the company and which he had asserted a lien over as security for fees owed to him.

Held by Kelly J in declaring that the respondent was not entitled to claim any lien on documents of the insolvent company held as security for fees owed by the company and ordering the respondent to deliver such documents to the liquidator of the insolvent company that the object of all statutory interpretation is to discern the intention of the legislature which has to be done by reference to the language which is used in the section under scrutiny. The language used in section 244(A) of the Companies Act, 1963 could allow of no other interpretation but that the holder of a lien is not entitled to claim such as against a liquidator of an insolvent company.

1 Mr Justice Kelly on the 9th day of April, 2003 .

2 On the 11 ^th December, 2002 Mr Luby was appointed liquidator of Macks Bakeries Limited. That was done pursuant to a resolution of the members passed at an extraordinary general meeting of the company. That appointment was confirmed at a meeting of the creditors held later that day.

3 On the 13 ^th December, 2002 the liquidator wrote to the respondent asking for details of all matters in respect of which the respondent had acted as solicitor for the company. He also requested details of title deeds, outstanding fees due to the respondent and "confirmation or any lien or other security which you claim"

4 On the 20 ^th December, 2002 the respondent provided the details requested. The fees payable by the company amounted to a total of €32,307.70. On the 29 ^th January, 2003 the respondents claimed fees in respect of work done in relation to the liquidation of the company amounting to a total of €2,625.70.

5 The respondent asserted and continues to assert a solicitor's common law retaining lien over folio MY20399 Co. Mayo and files and documents relating to the company in the respondent's possession as security for those fees. I should note for the sake of completeness that the respondent also holds folios MY4433F and MY4434F Co. Mayo. These are held on accountable trust receipt and a lien is not asserted in relation to these documents.

6 The present application is made pursuant to section 244(A) of the Companies Act, 1963as amended by the Companies Act, 1990which insofar as it is relevant provides

"Where the court has appointed a provisional liquidator or a company has been wound up by the court or by means of a creditors' voluntary winding up, no person shall be entitled as against the liquidator or provisional liquidator to withhold possession of any deed, instrument, or other document belonging to the company, or the books of account, receipts, bills, invoices or other papers of a like nature relating to the account or trade, dealings or business of the company, or to claim any lien thereon provided that -"

(a) where a mortgage, charge or pledge has been created by the deposit of any such document or paper with a person, the production of the document or paper to the liquidator or provisional liquidator by the person shall be without prejudice to the person's rights under the mortgage, charge or pledge (other than any right to possession of the document or paper)..."

7 The applicants contend that the wording of this section is crystal clear. They say that the effect of the section is to unambiguously disentitle the respondent to rely upon the lien so as to avoid handing over possession of the documents in suit to the applicant.

8 This statutory provision was introduced for the first time in the Companies Act, 1990. It was not part of Irish law prior to then.

9 Attention was drawn to the equivalent section in the United Kingdom which is s.246 of the Insolvency Act, 1986 but that differs significantly from the section in suit and is of little assistance.

10 The applicants...