Mouldpro International Ltd ((in Liquidation)) v The Companies Acts 1963 – 2005
| Jurisdiction | Ireland |
| Judge | Ms Justice Máire Whelan |
| Judgment Date | 16 March 2018 |
| Neutral Citation | [2018] IECA 88 |
| Date | 16 March 2018 |
| Court | Court of Appeal (Ireland) |
| Docket Number | [Appeal Number 2014/658] [Article 64 transfer] |
IN THE MATTER OF MOULDPRO INTERNATIONAL LIMITED (IN LIQUIDATION)
AND
IN THE MATTER OF THE COMPANIES ACTS 1963 – 2005
[2018] IECA 88
[Appeal Number 2014/658]
[Article 64 transfer]
THE COURT OF APPEAL
Remuneration – Liquidation – Company – Notice party seeking a reduction in the amounts of remuneration claimed to the liquidator in respect of discrete periods – Whether amounts ought to be reduced
Facts: Plastronix Investments Ltd, a notice party, brought an appeal to the Court of Appeal from the judgment of Finlay Geoghegan J made in the High Court on 9th October 2012 fixing to the remuneration sought by Mr Farrell, Official Liquidator, in relation to the performance by the liquidator of his duties. The order of the High Court, made on 25th October 2012 and perfected on 15th November 2012, provided that pursuant to s. 228 of the Companies Acts 1963–2012 and O. 74, r. 46 of the Rules of the Superior Courts 1986 the remuneration of the liquidator as provisional and official liquidator for four separate periods of the liquidation of a company, Mouldpro International Ltd (in liquidation), should be the amounts set forth in the said order totalling €1,298,350.51 plus VAT. Costs of the application were awarded to the liquidator and the notice party. Plastronix sought a reduction in the amounts of remuneration claimed to the liquidator in respect of each discrete period.
Held by Whelan J that there would be an order determining the remuneration of the liquidator, as provisional and official liquidator, to remain unchanged in Period 1, and to be reduced by 25% in Periods 2 and 3. Whelan J held that in respect of Period 4 the reduction in fees and remuneration made in the High Court would be varied from 20% to 25%.
Whelan J held that orders would be made in the following amounts: (i) with regard to the period 22nd July 2005 to 28th February 2006, €738,449.311 together with VAT of €155,074.36, total €893,523.67; (ii) with regard to the period 1st March 2006 to 30th September 2007, €261,284.38 together with VAT thereon; (iii) with regard to the period 1st October 2007 to 31st March 2009, €157,488.39 together with VAT thereon; (iv) with regard to the fourth period, €130,798.12 plus VAT thereon.
Appeal allowed.
This appeal is brought by Plastronix Investments Limited (‘Plastronix’), a notice party, from the judgment of Finlay Geoghegan J. made in the High Court on 9th October, 2012 fixing to the remuneration sought by Pierce Farrell, Official Liquidator, (‘the liquidator’) in relation to the performance by the liquidator of his duties: see Re Mouldpro International Ltd. [2012] IEHC 418. The order of the High Court was made on 25th October 2012 and was perfected on 15th November, 2012. It provided that pursuant to s. 228 of the Companies Acts 1963 – 2012 and O. 74, r. 46 of the Rules of the Superior Courts, 1986 that the remuneration of the liquidator as provisional and official liquidator for four separate periods of the liquidation of a company Mouldpro International Limited (in liquidation) (‘Mouldpro’) should be the amounts set forth in the said order totalling €1,298,350.51 plus VAT. Costs of the application were awarded to the liquidator and the notice party. Plastronix sought a reduction in the amounts of remuneration claimed to the liquidator in respect of each discrete period.
The company was incorporated and commenced trading in April 1987. It was established originally as a subsidiary of Toyota Ireland Limited pursuant to a technical collaboration agreement with Munekata Company Limited of Osaka in Japan (‘Munekata’). The company specialised in the manufacture of advanced technology plastic injection mouldings primarily for the consumer electronic and automotive industries. In time the company diversified into the production of advanced technology plastic injection mouldings for the construction industry. In 1989 the company was acquired by Munekata Group from Toyota Ireland Limited. In 1992 it was integrated into the business of Munekata Group under the name Munekata (Ireland) Limited. In 2002 the directors for the time being of the company acquired it through a management buy-out from Munekata. It was at that stage that the company changed its name to Mouldpro International Limited. In 2003 it established a branch of its operations at a facility approximately 60 miles outside Prague at Korozluky, Most, in the Czech Republic. The company operated factories in Dublin and in Most.
Arising from its historic relationship with Munekata the company's key clients included Sony, Orion and Toshiba. The subsequent dramatic reversal of fortunes for the company is a reminder that we live in a small open economy characterised by financial globalisation where decisions made in distant boardrooms in Osaka or Beijing can dramatically and irrevocably adversely impact on the business and affairs of even the most well and efficiently-run companies.
By the end of October, 2004, Sony and Toshiba had announced the cessation of their UK production operations. As a supplier of mouldings to both companies, UK operations represented the primary activity of the company. This turn of events had an immediate and devastating impact upon Mouldpro which then ceased to be viable. The liquidator was appointed as a provisional liquidator on 22nd July 2005 on foot of a petition brought by a related company, the notice party, Plastronix, in its capacity as a creditor of the company. Subsequently, on 14th August, 2005, an order was made in the High Court providing for the winding up of the company and the appointment of Mr Farrell as official liquidator.
The liquidator claimed the following fees:
(i) Period 1: 22nd July, 2005 – 28th February, 2006
Net sum claimed: €738,449.31
VAT thereon: €155,074.36
Total claimed: €893,523.67
(ii) Period 2: 1st March, 2006 – 30th September, 2007
Net sum claimed: €348,379.17
VAT thereon: €73,159.63
Total claimed: €421,538.80
(iii) Period 3: 1st October, 2007 – 31st March, 2009
Net sum claimed: €211.522.03
VAT thereon: €45,477.24
Total claimed: €256,999.27
(iv) Period 4: 1st April, 2009 – 30th September, 2011
Net sum claimed: €196,081.00
VAT thereon: €41,177.00
Total claimed: €237,258.00
(v) Post-costs: €8,264.00
VAT: €1,736.00
Total: €10,000.00
The aggregate sum being claimed in the High Court was:
Net amount: €1,502,695.41
VAT thereon: €316,624.24
Total: €1,819,319.74
The trial judge did not interfere with the sums claimed save in respect of the fourth period, from 1st April, 2009 to 30th September, 2011, when the sum claimed was abated to €139,518.00 together with VAT. Further, an issue arose in the course of the hearing pertaining to the hourly rates being charged by two individual members of the liquidator's firm's staff, Mr Taite and Mr Carr in the fourth period. The trial judge found that the increased hourly charge out rates sought on behalf of these individuals was not reasonable. It was found that their promotion should be reflected in some increase in charge out rates but not in respect of the sums claimed. The judge found that it may be efficient in the management of a liquidation to retain a member of staff already working in the liquidation who has been promoted within the liquidator's firm but that such a decision does not automatically justify remuneration for the liquidator based on the full increased charge out rate which the firm attributes to such a person by reason of their promotion. The Court accordingly made an order determining that the remuneration of the liquidator, both as provisional liquidator and official liquidator, be approved with reductions in respect of the fourth period as aforesaid. I propose to consider presently the details of the judgment of Finlay Geoghegan J..
The trial judge, having set out the statutory provisions at s. 228 of the Companies Act 1963 and the provisions of O. 74, r. 46, noted the jurisprudence with regard to the discretion vested in the Court as adumbrated by Murphy J. in Car Replacements Limited (15 December 1999, unreported). The Court noted that it is the practice to put a creditor likely to be affected by the determination of the liquidator's remuneration on notice and to direct that person to act as a legitimus contradictor. (para. 9)
The learned trial judge noted at para. 10 that the established practice is that an official liquidator may apply from time to time throughout the liquidation seeking either
(a) a determination of his remuneration for a specified period, or
(b) a payment on account of the amount of the remuneration which he is seeking in respect of that period:
‘In recent years, it has been the prevalent practice only to make orders for payments on account and to leave the final determination of the remuneration to the end of the liquidation. The orders for payments on account are made upon an undertaking from the official liquidator to refund the liquidation in the event that the amount determined is less than the payment on account.’
The Court further noted at para. 10:
‘Where objections are made to the amount of the remuneration on an application for a payment on account, the Court will sometimes make orders for payments on account of less than the total amount sought. However, even where an order is made for the payment on account of the full remuneration sought, it is not indicative that the Court will fix the remuneration in the amount sought. This is accepted on behalf of the Liquidator herein.’
The trial judge continued:
‘Since the delivery of the judgment in Re Sharmane Ltd., it has been clear that the Court, in determining the remuneration of persons appointed as examiners,...
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