McIntosh & Company Ltd, v Thompson & Company (Carriers) Ltd (No. 2)

• Jurisdiction: Ireland
• Judgment Date: 24 March 1934
• Date: 24 March 1934
• Court: Supreme Court (Irish Free State)

McIntosh & Co. v. Thompson & Co. (No. 2).

In the MATTER of the COMPANIES ACTS, 1908to 1924, and in the MATTER of THOMPSON & CO. (CARRIERS), LTD.

CHARLES McINTOSH & CO., LTD.

Petitioners

THOMPSON & CO. (CARRIERS), LTD., Respondents (No. 2)

Supreme Court.

Company Winding-up - Compulsory liquidation - Insolvency - Claim of debenture holder - Priority - Moneys due to the Central Fund - Debts due to the State - Crown debts - Companies (Consolidation) Act, 1908 (8 Ed. 7,c. 69), sect. 209, sub-sects. 1 and 2.

A company, being indebted to W. for goods supplied, gave him a first debenture, charging the property of the company with the amount due to him (£375 10s. 11d.) and interest thereon. The company having made default in payment of the instalments, the amount secured became due and payable. The company being unable to pay the amount in cash handed a decree for £260 (which they had obtained against a County Council for malicious injuries) to W.'s solicitors instructing them to collect the amount and apply it in reduction of the sum due to W. Payment of this £260 was obtained on 4th April, 1928. An order had been made on 27th June, 1927, by Meredith J. that the company be wound up by the Court, and a Liquidator had been appointed. When W.'s solicitors obtained payment of the £260 from the County Council they notified the Liquidator, who, on 23rd July, 1928, obtained an order from Meredith J. directing that the amount be brought into Court subject to the lien of W. thereon. On the same day the Liquidator obtained liberty to pay a second debenture holder the amount of his claim and costs, the Liquidator stating that the funds would be sufficient to pay all preferential claims. W. did not consent to this payment being made. The Liquidator, in stating that the funds would be sufficient to pay all preferential claims, was relying on a decision of Meredith J. given on 27th April, 1931, that the claim of the Minister for Finance for fines inflicted on the company for offences under the Motor Car Acts and Roads Acts was not payable in the winding-up in priority to the claims of the general creditors of the company. But this decision wag reversed by the Supreme Court (reported[1932] I. R. 45), with the result that the company was unable to pay the debenture holders in full. W. applied for an order that he was entitled to payment of all sums due on foot of his debenture in priority to the said claim of the Minister for Finance and also in priority to the claim of the Minister for Industry and Commerce for arrears of contributions in respect of employees of the company payable under the Unemployment Insurance Act, 1920, during the period preceding the four months before the commencement of the winding-up, and for which debts priority had been claimed as State debts (as representing the former Crown debts).

Held by Meredith J., and on appeal his decision wag affirmed by the Supreme Court, that W. had not abandoned his security or forfeited his right to priority and wag entitled to an enforcement of his claim against the property of the company next after the preferential payments specified in sect. 209, sub-sect. 1, of the Companies (Consolidation) Act, 1908, or the retention of sufficient to meet any not already paid, to be paid the amount found due on foot of his charge and such costs as were payable with his demand.

Motion.

An order was made by Meredith J. on the 27th day of June, 1927, that Thompson & Co. (Carriers), Ltd., be wound up by the Court under the provisions of the Companies (Consolidation) Act, 1908, and Mr. Eustace J. Shott was appointed Official Liquidator of the Company.

In reply to the advertisement for claims, the Chief State Solicitor sent in on May 2nd, 1928, on behalf of the Minister for Finance, a demand for £36 2s. 0d. representing"warrants for fines outstanding against the Company for offences against the Motor Car Acts and Road Acts," and, on May 15th, 1928, a further demand for £42 15s. 0d."for fines inflicted on the Company in respect of offences under the same Acts." In the case of each demand it was stated that the sum claimed was a preferential debt due to the State. The Liquidator, having settled the list of debts and claims, submitted on the 15th April, 1931, a memorandum for the decision of the Court as to whether the claim of the Minister or any part of it was to rank as a preferential claim or not. Meredith J. decided on the 27th April, 1931, that the claim was not payable in this winding-up matter in priority to the claims of the general creditors of the Company. From this decision the Minister for Finance appealed to the Supreme Court, and that Court discharged the order of Meredith J., and declared that the Minister for Finance was entitled to the order sought by him in his notice of appeal, viz., that he was entitled to be paid the sum claimed (£78 17s. 0d.) as a State debt and in priority to the ordinary creditors. The Supreme Court so held upon an express admission, and without deciding, that the amount claimed was within the provisions of sect. 38, sub-sect. 2, of the Finance Act, 1924, and had, therefore, attached to it all such rights, privileges, and priorities as had, prior to the passing...