McGowan and Others v Gannon

• Jurisdiction: Ireland
• Judge: Miss Justice Carroll
• Judgment Date: 25 January 1983
• Neutral Citation: 1983 WJSC-HC 666
• Docket Number: No. 11751P/1982
• Court: High Court
• Date: 25 January 1983

McGOWAN v. GANNON

BETWEEN

PATRICK McGOWAN, THOMAS ROBINSON, BARBARA McGOVERN, ANDREWGILLESPIE, AND ALBERT BARTLET

PLAINTIFFS

AND

JOSEPH GANNON

DEFENDANT

1983 WJSC-HC 666

No. 11751P/1982

THE HIGH COURT

Subject Headings:

COMPANY: creditor

REAL PROPERTY: incumbrance

1 Judgment delivered the 25th of January, 1983,by Miss Justice Carroll

2 This judgment concerns the right of a Guarantor and/or Creditor of a company to information from a Receiver concerning the proposed purchase price of the company's assets. This was a preliminary issue which arose when the matter first came before me. The Defendant is Receiver of a company called Food Products (Donegal) Limited. All the Plaintiffs are Creditors of the company. Some of them are Directors and the first-named Plaintiff, Patrick McGowan, is also a Guarantor of the company'sdebts.

3 The Plaintiffs sought to restrain the sale of the company's factory premises and plant in Donegal by the Receiver because they apprehended that it was being sold at an under value. On the initial application none of the Plaintiffs knew the details. ThePlaintiffs applied to restrain the sale until they were told the purchase price and then have liberty to consider whether to apply for an injunction to restrain the sale completely.

4 The matter was adjourned for a week to enable the Plaintiffs toascertain

5 (a) If the company required the information and

6 (b) If the company wished to be joined as a Plaintiff.

7 During the course of the week the Directors of the company resolved that the company be joined as a Plaintiff and sought the information. The Defendant supplied the information regarding negotiations to the directors of the company, in confidence. Therefore it is still an issue whether the Plaintiffs in their private capacities as creditors or in the case of Mr. McGowan, as Guarantor, are entitled to the information as of right.

8 Among the authorities cited by the Plaintiffs was the case of ChaineNicholson -v- The Bank of Ireland ( 1976 IR 393) which held that a potential beneficiary under a discretionary trust was entitled to information about the administration of the fund. Another case cited was Standard Chartered Bank Ltd. -v- Walker & anor. (1982) 3 AER 938 which held that a Guarantor could sue a Receiver for negligenceindisposing of the assets of a company whose debts were guaranteed as there was sufficient proximity between the Receiver and Guarantor for the Receiver to owe a duty of care to the Guarantor.

9 Under clause 7 (c) of the debenture under which the Receiver was appointed, it is provided that the Receiver should be the agent of the borrower and the borrower should be solely responsible for his acts and defaults and for his remuneration. Therefore under the ordinary law of contract, the company as principal is entitled to the information from its agent, the Receiver. No point arises on this issue now as the Receiver has supplied the information on request.

10 However, I am not satisfied that a Guarantor is entitled to any information regarding the sale of the company's assets. The Guarantor is not in the same position as a potential beneficiary under a discretionary trust. Nothing has...