Murray v Browne
| Jurisdiction | Ireland |
| Judge | Mr Justice Max Barrett |
| Judgment Date | 22 October 2015 |
| Neutral Citation | [2015] IEHC 651 |
| Court | High Court |
| Date | 22 October 2015 |
[2015] IEHC 651
THE HIGH COURT
BETWEEN:
- and -
Company – S. 150 of the Companies Act 1990 – S.56 of the Company Law Enforcement Act, 2001 – Voluntary liquidation – Inordinate delay by liquidator – Inadvertence
Facts: The respondent sought an order for discontinuation of the present proceedings as there was a considerable delay in commencement of those proceedings by the fault of the liquidator in contravention of s. 56 (2) of the Company Law Enforcement Act 2001.
Mr. Justice Max Barrett granted an order to the effect that the present proceedings would not be allowed to continue and that no restriction would be issued against the respondent under s. 150 of the Companies Act 1990. The Court in agreement with McKechnie J. in Dowall v. Cullen [2009] IEHC 580 held that the delay by the liquidator in commencement of proceedings per se tilted the balance in favour of the respondent even if it was not prejudicial to the respondent as it would hamper the process of discharge of burden by the respondent under s.150 of the 1990 Act. The Court observed that the provisions of s. 56 of the 1990 Act being regulatory should be complied with diligently, notwithstanding the honest and inadvertent mistake on the part of the liquidator. The Court while assessing the within application under s. 150 of the 1990 Act considered the honest and untainted conduct of the respondent as reflected by payment of a huge amount of taxes by him and steps taken to increase the business of the company and held that there was no need to put any restriction on the respondent.
1. To expect perfection is to expect too much. Mistakes happen and, when it comes to the liquidator here, that is all that happened. There was no deliberation, only inadvertence. He misplaced the letter from the ODCE advising him that he was not relieved of his obligation to bring a 's. 150 application' under the Companies Act 1990. As soon as he realised this, he contacted the ODCE and the within proceedings then commenced. The liquidator was honest in his dealings with the ODCE, he was honest in his dealings with the court, and that honesty is to be applauded. But the liquidator's error does have the consequence that the within proceedings have been commenced long out of time. The question for the court is whether Mr Browne ought now to benefit from the liquidator's mistake. The court concludes that he must, though it concludes too that it would not in any event have been obliged to issue a declaration of restriction against him under s. 150.
Under s. 56(1) of the Company Law Enforcement Act 2001:
"A liquidator of an insolvent company shall, within 6 months after his or her appointment…and at intervals as required by the Director [of Corporate Enforcement] thereafter, provide to the Director a report in the prescribed form."
Under s. 56(2) of the Act of 2001:
"A liquidator of an insolvent company shall, not earlier than 3 months nor later than 5 months (or such later time as the court may allow and advises the Director) after the date on which he or she has provided to the Director a report under subsection (1) apply to the court for the restriction under section 150 of the Act of 1990 of each of the directors of the company, unless the Director has relieved the liquidator of the obligation to make such an application."
4. A mark of the significance that the Oireachtas attaches to compliance with the foregoing requirements, including the timelines prescribed therein, is the provision in s.56(3) of the Act of 2001 that:
"A liquidator who fails to comply with subsection ( 1) or (2) is guilty of an offence."
5. One might - this Court respectfully does - query whether regulatory sanction by a professional body, rather than criminal sanction by the courts, with all the consequences such a form of sanction invariably entails (including the potential to be struck off as a professional in the event of a conviction being sustained) would not be the more appropriate sanction in the unlikely occurrence of a deliberate transgression by a liquidator of s. 150 - and here, the court notes again, there was no deliberation, just inadvertence.
6. In any event, the liquidation of Eyecom commenced on 14 th January 2013. The first report to the Director was filed slightly out of time on 14 th August, 2013. If one ignores this delay, any application for restriction ought, by virtue of s.56(2), to have commenced sometime between 14 th November, 2013 and 14 th January, 2014. Consistent with the honest manner in which he has approached these proceedings, the liquidator accepts this to be so, averring in his affidavit evidence that "The application herein ought to have been brought by me before the 14 th of January 2014" In fact, the Notice of Motion grounding the within application is dated 18 th February, 2015. So the application was commenced at least 13 months out of time.
7. Mr Browne contends, by reference to case-law and the European Convention on Human Rights, that the delay arising in the within proceedings is such that the court ought now to refuse to allow the proceedings to continue. In effect, he seeks that (1) the court now exercise its discretion under s.56(2) of the Act of 2001 not to allow the continuation of proceedings that were commenced significantly out of time and/or (2) by reference to Article 6(1) of the European Convention on Human Rights, the court should not allow these s. 150 proceedings to continue.
8. When it comes to the issue of delay, the court has been referred to three judgments of interest, namely the High Court decisions in Dowall v. Cullen [2009] IEHC 580 and Taite v. Breslin [2014] IEHC 184, and the decision of the European Court of Human Rights in Davies v. United Kingdom [2002] 355 EHRR.
9. This was a s. 150 application in which McKechnie J. observed as follows, at para.92 of his judgment:
"It would thus appear that in the context of s. 150 …certain specific factors should be taken into account which render it particularly unjust to allow an application to proceed where there has been a large lapse of time, notwithstanding that no actual prejudice can be identified.... [I] n a s. 150 application the mere inordinate passage of time, due to the special features of the section, in particular the burden on a respondent to show that he has acted honestly and responsibly in relation to the affairs of the company, and that there are no just and equitable reasons for restricting him, would render it particularly iniquitous to allow such an application to continue where a large period of time has elapsed. In those circumstances, the passage of time would severely hamper a respondent's delay to properly defend himself, and thus tend to tip the scales of justice in favour of the respondent even in the absence of any specifically identifiable prejudice."
10. Counsel for the liquidator has pointed to the fact that Dowall ultimately did not fall to be decided on the issue of timing (see para. 111 thereof) and thus the above-quoted text is obiter. However, given the eminence of McKechnie J., this Court is inclined to pay heed to the above-quoted observations regardless of whether or not they form part of the ratio in Dowall. McKechnie J. makes, in essence, two points when it conies to s. 150 proceedings: (1) delay per se may tip the scales of justice in favour of a respondent even in the absence of any specifically identifiable prejudice; and (2) this is because "a large lapse of time" may hamper a respondent in discharging the burden on her or him under s.l 50.
11. When.it comes to (2), it is important to note that McKechnie J. is referring to delay within the context of s. 150 of the Companies Act 1990, not s.56 of the Act of 2001. When it comes to that latter provision, it is clear from the tight timelines it prescribes, and the criminal sanctions that can arise for a liquidator if those provisions are breached, that the Oireachtas expects...
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