Murphy v O'Flynn

JurisdictionIreland
JudgeMr. Justice David Keane
Judgment Date18 April 2016
Neutral Citation[2016] IEHC 197
Docket Number[2015 No. 102 COS]
CourtHigh Court
Date18 April 2016

[2016] IEHC 197

THE HIGH COURT

Keane J.

[2015 No. 102 COS]

IN THE MATTER OF BOD INVESTMENTS (IRL) LIMITED (IN VOLUNTARY LIQUIDATION) AND IN THE MATTER OF SECTION 150 OF THE COMPANIES ACT, 1990 AND IN THE MATTER OF SECTION 56 OF THE COMPANY LAW ENFORCEMENT ACT, 2001

BETWEEN
GERARD MURPHY
APPLICANT
and
WILLIAM O'FLYNN

and

DEIRDRE O'FLYNN
RESPONDENT

Company – S. 150 of the Companies Act, 1990 – The Companies Act 2014 – S. 56 of the Companies Enforcement Act, 2001 – Voluntary liquidation – Declaration of restriction

Facts: The applicant/liquidator sought a declaration of restriction against the first named respondent pursuant to s. 150 of the Companies Act 1990. The preliminary issue arose concerning the statute under which the case would be dealt with. The applicant contended that the first named respondent had acted dishonestly in managing the affairs of the company as he let the company to be struck off repeatedly for failure to file accounts despite its restoration in the register. The applicant also alleged that the company failed to honour its liabilities, which showed lack of commercial probity and want of appropriate standards on the part of the first named respondent in utilizing the financial resources effectively.

Mr. Justice David Keane granted the declaration of restriction in relation to the first named respondent. The Court held that since the present application, though made under s. 150 of the Companies Act, 1990, was brought to hearing after the commencement of the Companies Act 2014, the Act of 2014 would be applicable for deciding the application. The Court held that since the first named respondent had not contested the present application, the Court was bound to accept the evidence presented by the liquidator. The Court observed that it had earlier refused to grant a declaration of restriction in relation to the second named respondent as there were evidences that she had acted honestly in managing the affairs of the company. The Court held that irresponsible conduct of a director could not be forgiven by subsequent compliance with the directions of the liquidator after the commencement of the winding-up of the company.

JUDGMENT of Mr. Justice David Keane delivered on the 18th of April 2016
Introduction
1

This judgment concerns an application for a declaration of restriction against the first named respondent, William O'Flynn, pursuant to s. 150 of the Companies Act 1990 (‘the 1990 Act’). On the 13th July 2015, I gave an ex tempore ruling, refusing to make such a declaration against the second named respondent, Deirdre O'Flynn.

2

Before dealing with the merits of the restriction application against Mr O'Flynn, it is necessary to address, as a preliminary issue, the question of the proper enactment by reference to which that application should be considered and pursuant to which any appropriate order should be made. The issue arises because, between the 9th March 2015, when the motion grounding the application issued, and the 13th July 2015, when it first came on for hearing, the relevant provisions of the Companies Act 2014 (‘the 2014 Act’) came into operation on the 1st July 2015, in accordance with the terms of the Companies Act 2014 (Commencement) Order 2015 ( S.I. No. 169 of 2015).

Companies Act 2014 – transitional provisions
3

S. 4 of the 2014 Act repealed the whole of the 1990 Act, including s. 150. The jurisdiction to make a declaration restricting a director of an insolvent company can now be found in s. 819 of the 2014 Act, which is couched in similar, though not identical, terms to those of the section it replaces.

4

S. 5 of the 2014 Act deals with savings and transitional provisions. S. 5 (7) gives effect to the particular savings and transitional provisions contained in Schedule 6 to the Act. Paragraph 1 of that schedule states that the continuity of the operation of the law relating to companies is not affected by the substitution of the 2014 Act for the prior Companies Acts. Paragraph 7 (1) of the same schedule goes on to state that, without prejudice to the generality of paragraph 1, the continuity of the law relating to the restriction of directors is not affected by the substitution of the relevant provisions of the 2014 Act for those of Part VII of the 1990 Act.

5

Paragraph 7 (2) of Schedule 6 provides, also without prejudice to the generality of paragraph 1, that any s. 150 restriction declaration made and in force before the commencement of s. 819 of the 2014 Act on the 1st July 2015 shall continue in force and operate as a restriction declaration made under s. 819.

6

Paragraph 8 (1) of Schedule 6 provides that:

‘Any thing commenced under a provision of the prior Companies Acts, before the repeal, by this Act, of that provision, and not completed before that repeal, may be continued and completed under the corresponding provision of this Act.’

7

However, s. 5 (8) of the 2014 Act expressly states that the section in which it is contained ‘is without prejudice to the generality of the Interpretation Act 2005 and, in particular, section 27 of it.’

8

S. 27 (1) (e) of the Interpretation Act 2005 (‘the 2005 Act’) provides that the repeal of enactment does not:

‘prejudice or affect any legal proceedings (civil or criminal) pending at the time of the repeal ….’

9

S. 27 (2) of the 2005 Act further provides that:

‘Where an enactment is repealed, any legal proceedings (civil or criminal) in respect of a right, privilege, obligation or liability acquired, accrued or incurred under, or an offence against or contravention of, the enactment may be instituted, continued or enforced, and any penalty, forfeiture or punishment in respect of such offence or contravention may be imposed and carried out, as if the enactment had not been repealed.’

10

While s. 5 (8) of the 2014 Act makes particular reference to s. 27 of the 2005 Act, it is also expressed to apply without prejudice to the generality of that Act. For that reason, it may be significant to note that s. 26 (2) (c) of the 2005 Act provides as follows:

‘(2) Where an enactment (‘former enactment’) is repealed and re-enacted, with or without modification, by another enactment (‘new enactment’), the following provisions apply:

(c) proceedings taken under the former enactment may, subject to section 27 (1), be continued under and in conformity with the new enactment in so far as that may be done consistently with the new enactment….’

11

Presumably for the avoidance of any doubt, paragraph 15 of Schedule 6 to the 2014 Act also states that: ‘Save for any express limitation by this Schedule of that Act's terms, this Schedule is without prejudice to the generality of the Interpretation Act 2005.’

12

In summary, whereas paragraph 8 (1) of Schedule 6 of the 2014 Act and s. 26 (2) (c) of the 2005 Act provide that an application for a declaration of restriction under s. 150 of the 1990 Act, which commenced but was not completed prior to the repeal of that section, may be continued and completed under s. 819 of the 2014 Act, those provisions apply without prejudice to the terms of s. 27 of the 2005 Act, whereby proceedings commenced under s. 150 of the 1990 Act may be continued as if the 1990 Act had not been repealed.

13

It seems to me that the word “may” in paragraph 8 (1) of Schedule 6 to the 2014 Act; s. 26 (2) (c) of the 2005 Act; and s. 27 (2) of the 2005 Act is used in the truly permissive sense (that is to say, the enabling rather than mandatory sense) in each instance, which has the practical effect of conferring a discretion upon the Court to continue and complete an application such as the present one under either s. 819 of the 2014 Act or s. 150 of the 1990 Act, as the requirements of justice dictate in the particular circumstances of each case.

14

In considering the requirements of justice, it is useful first to take an overview of the potential effect of the transitional provisions of the 2014 Act upon the various situations that will arise. First, in the case of a declaration of restriction under s. 150 of the 1990 Act made prior to the commencement of the 2014 Act, paragraph 7 (2) of Schedule 6 provides that, subsequent to the commencement of the latter Act, it will continue in force and operate as a restriction declaration made under s. 819 of that Act. It seems that this will be the case even though the conduct at issue is necessarily conduct that occurred prior to the commencement of the 2014 Act.

15

Second, in a case such as the present, where a restriction application has been brought under s. 150 of the 1990 Act but not determined prior to the commencement of the 2014 Act, the provisions described above confer a discretion upon the Court to continue and determine that application under either s. 150 of the 1990 Act or s. 819 of the 2014 Act. As with the previous case, such applications will necessarily relate to conduct alleged to have occurred prior to the commencement of the 2014 Act.

16

Third, in cases where a restriction application has been brought under s. 819 of the 2014 Act, subsequent to the commencement of that Act, though in relation to conduct alleged to have occurred prior to its commencement, there seems to be no question but that the application must be determined under the provisions of s. 819. Different considerations would, of course, arise should such an application be brought under s. 150 of the 1990 Act, after the commencement of the 2014 Act, in reliance upon the terms of s. 27 (2) of the 2005 Act whereby proceedings in respect of any obligation or liability incurred under a repealed enactment may be instituted as if the enactment had not been repealed.

17

Accordingly, its seems to me that, once it is acknowledged that in every case within the first and third categories the relevant order, where made, must and will operate as one under s. 819 of the 2014 Act, it is...

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3 cases
  • McMahon v Larkin
    • Ireland
    • High Court
    • 24 de junho de 2016
    ...make the appropriate declaration of restriction concerning him. For the reasons set out in my judgment in Murphy v. O'Flynn & Anor [2016] IEHC 197, I propose to do so pursuant to the terms of s. 819 of the Companies Act 2014. The position of the second named respondent 12 The position of th......
  • Wallace (Liquidator) v Edgeworth
    • Ireland
    • High Court
    • 19 de julho de 2017
    ...appeared to be to apply s.819 of the 2014 Act. The court was directed to the decision of Keane J. in Re BOD Investment (Ireland) Limited [2016] IEHC 197. In this case, Keane J. analysed the interpretative provisions in schedule 6 of the Companies Act, 2014 alongside sections 26 and 27 of th......
  • Deirdre O'Flynn v J. M
    • Ireland
    • High Court
    • 1 de fevereiro de 2021
    ...J. gave an ex tempore ruling refusing to disqualify the appellant. That is referenced in a written judgment issued on a later date, ( [2016] IEHC 197 Murphy v. O'Flynn Unreported, High Court, 18th April, 7 The appellant complained to the Law Society about the respondent solicitor in May and......

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