Mitek Holdings Ltd (Formerly known as Antigen Holdings Ltd) and Others v Companies Act

• Jurisdiction: Ireland
• Judge: Ms. Justice Finlay Geoghegan,Ms. Finlay Geoghegan
• Judgment Date: 05 May 2005
• Neutral Citation: [2005] IEHC 63,[2005] IEHC 160
• Court: High Court
• Docket Number: [2002 No. 438
• Date: 05 May 2005

[2005] IEHC 160

THE HIGH COURT

[No. 438 COS/2002]

GRACE (LIQUIDATOR) v KACHKAR & MCCLELLAN CARRIGAN

IN THE MATTER OF

MITEK HOLDINGS LIMITED

(FORMERLY KNOWN AS ANTIGEN HOLDINGS LIMITED)

MITEK PHARMACEUTICALS LIMITED

(FORMERLY KNOWN AS ANTIGEN PHARMACEUTICALS LIMITED)

CASTLEHOLDING INVESTMENT COMPANY LIMITED

MITEK LIMITED (FORMERLY KNOWN AS ANTIGEN LIMITED)

(ALL IN LIQUIDATION)

AND IN THE MATTER OF

MIZA IRELAND LIMITED (IN LIQUIDATION), A RELATED COMPANY

AND IN THE MATTER OF

THE COMPANIES ACTS, 1963– 2001,

AND IN THE MATTER OF

SECTION 150 OF THE COMPANIES ACT, 1990, AND

SECTION 56 OF THE COMPANY LAW ENFORCEMENT ACT, 2001,

BETWEEN

TOM GRACE, LIQUIDATOR

APPLICANT

AND

JACK KACHKAR AND ROBERT McCLELLAN CARRIGAN

RESPONDENTS

JUDGMENT RE COSTS OF INVESTIGATIONS

COMPANIES ACT 1990 S150

COMPANIES ACT 1990 S150(4B)

COMPANY LAW ENFORCEMENT ACT 2001 S56

RSC O.74 r46

RAHILL v BRADY 1971 IR 69

MAXWELL INTERPRETATION OF STATUTES 12ED

COMPANIES ACT 1990 S150(4A)

COMPANY LAW ENFORCEMENT ACT 2001 S41

COMPANY LAW ENFORCEMENT ACT 2001 S56(2)

CRAIES ON STATUTE LAW 7ED 65

HOWARD v COMMISSIONERS PUBLIC WORKS 1994 1 IR 101

COMPANIES ACT 1963 S244

COMPANIES ACT 1963 S281

COMPANY LAW

Costs

Directors - Restriction - Meaning of phrase 'any costs incurred by applicant in investigating the matter' - Whether phrase included remuneration of applicant and his colleagues in investigating matters relevant to s 150 application - Whether "costs incurred by the applicant" included his own remuneration - Whether the remuneration of applicant for investigating matters relevant to s. 150 application was cost incurred in winding up - Companies Act 1990 (No 33), s 150(4B) - Company Law Enforcement Act 2001 (No 28), ss 41 and 56 - Remuneration element of costs disallowed (2002/438Cos - Finlay Geoghegan J - 5/5/2005) [2005] IEHC 160; [2005] 4 IR 522

Re Mitek Holding Ltd: Grace v Kachkar

1 Ms. Finlay Geoghegan delivered on the 5th day of May, 2005 .

2 On the 21st February, 2005, the court decided to make declarations of restriction of the respondents, Mr. Kachkar and Mr. Carrigan pursuant to s.150 of the Companies Act, 1990 for reasons set out in a written judgment delivered on that date.

3 The applicant then applied for orders for costs pursuant to s.150 (4B) of the Act of 1990. This subsection provides:-

"The court, in hearing an application for a declaration under subsection (1) from the Director, a liquidator or a receiver, may order that the directors against whom the declaration is made shall bear the costs of the application and any costs incurred by the applicant in investigating the matter".

4 In the course of application for costs an issue arose as to the proper construction of s.150 (4B) of the Act of 1990. Counsel for the parties argued the issue before me and I reserved my decision.

5 The issue is whether the phrase "any costs incurred by the applicant in investigating the matter" in s.150 (4B) of the Act of 1990 includes remuneration due to the liquidator for time spent by him and his colleagues in investigating the matters involved in the s.150 application and reporting thereon to the Director of Corporate Enforcement ("the Director") pursuant to section 56 of the Company Law Enforcement Act, 2001.

6 The application for costs was grounded upon an affidavit sworn on behalf of the applicant by Bobby Waters a senior manager in the firm of PriceWaterhouseCoopers, Chartered Accountants. The applicant liquidator, Mr.Tom Grace is a member of that firm. Mr. Waters deposes to the fact that he is the person with day-to-day responsibility for the liquidations. Mr. Waters in his affidavit describes the nature of the matters investigated by the applicant in connection with the s.150 applications and then sets out the time costs of the applicant, Mr. Waters and a senior associate and an associate of the firm of PriceWaterhouseCoopers. This is prepared in the normal format in which an official liquidator seeks to have the court determine his remuneration in a winding up by the court. It sets out the numbers of hours worked by each person and the rate charged by PriceWaterhouseCoopers for such work. The total claimed in this application is €21,372.00 plus the VAT at 21%.

7 Whilst counsel for the applicant averted to the fact that the sums sought related partly to the time spent by the official liquidator personally and in part to time spent by three of his colleagues, he did not pursue a submission based on any distinction between the two. No such distinction appears justified. It has long been the practice in windings up by the court to determine the remuneration of an official liquidator, such as the applicant herein, who is a member of a firm as including remuneration due for work done by him personally and work carried out on the liquidation by colleagues within the firm. Such treatment is envisaged by O. 74,

8 r. 46 of the Rules of the Superior Courts 1986. Whilst an individual is appointed official liquidator, in practice the liquidation is normally conducted by a team of persons employed by the firm to which the official liquidator belongs. The team is of course lead by the official liquidator who takes ultimate responsibility for the decisions taken and work done.

9 I am satisfied therefore the single issue is whether the phrase "any costs incurred by the applicant" includes the remuneration of or due to the liquidator.

10 Neither "costs" nor "costs incurred by the applicant" is defined in the Act of 1990 and therefore must be interpreted in accordance with the ordinary rules for the construction of a statute. In Rahill v. Brady [1971] I.R. 69 Budd J. stated of those ordinary rules at p. 86:-

"... In the absence of some special technical or acquired meaning, the language of a statute should be construed according to its ordinary meaning and in accordance with the rules of grammar. While the literal construction generally has prima facie preference, there is also the further rule that in seeking the true construction of a section of an Act the whole Act must be looked at in order to see what the objects and intention of the legislature were; but the ordinary meaning of words should not be departed from unless adequate grounds can be found in the context in which the words are used to indicate that a literal interpretation would not give the real intention of the legislature."

11 I was referred to two further relevant rules of construction from Maxwell on the Interpretation of Statutes (12th ed.). Firstly the well settled rule that statutes which impose pecuniary burdens are subject to the rule of strict construction. The charges must be imposed by clear and unambiguous language (see Maxwell op cit p. 256).

12 The second is a presumption that the same word will have the same meaning in different parts of a statute. Whilst there is authority for construing the same words as having different meanings in different parts of a statute, and indeed even within the same section (see Maxwell op cit p. 279), the presumption was relied upon in relation to the use of the word "costs" within the same subsection.

13 I am satisfied that each of the above principles apply to the construction of s.150 (4B) of the Act of 1990. Construing the section in accordance with these principles I have concluded that the phrase "and any costs incurred by the applicant in investigating the matter" cannot be construed so as to include the amount charged in the winding up for the remuneration of the official liquidator and his colleagues in investigating the matters relevant to section 150 of the Act of 1990. My reasons for reaching this conclusion in accordance with the above principles are as follows.

14 The applicant is the official liquidator as expressly provided for in s.150 (4A) of the Act of 1990. At law, he is a separate and distinct person to the company, which is in the course of being wound up. Prima facie the words "costs incurred by the applicant" mean sums of money that the applicant liquidator is liable to pay to a third party. Such sums do not include his own remuneration.

15 Such literal construction was not seriously disputed by counsel for the applicant but he urged that the phrase in s.150(4B) must be looked at in its statutory context to see what the objects and intention of the legislature were and submitted that when examined they justified a departure from the ordinary meaning of the phrase.

16 Section 150(4B) was inserted by s.41 of the Company Law Enforcement Act, 2001. Section 56 of the Act of 2001 obliges a liquidator to make a report to the Director in a prescribed form. The prescribed form, as was clearly intended by s.56 requires the liquidator to report upon matters pertaining to a potential application for a declaration of restriction of directors of the company in liquidation under section 150 of the Act of 1990. Section 56(2) of the Act of 2001 obliges a liquidator to bring an application under s.150 unless relieved by the Director. It was submitted on behalf of the liquidator that the purpose of the legislature in inserting s.150 (4B) to the Act of 1990 (by s.41 of the Act of 2001) was to ensure that where a successful application under s.150 was made by a liquidator that the costs incurred in the winding up of investigating the matters should be borne by the directors and not by the creditors of the company. The burden of the submission was that by reason of the overall legislative scheme of the Act of 2001 the phrase "costs incurred by the applicant" should, in relation to an application brought by a liquidator be construed as meaning "costs incurred in the winding up" in investigating the matters relevant to section 150 of the Act of 2001

17 I cannot accept that submission. It does not appear to me that there is anything in the wording...