Myles Kirby v Michael CarrollIn the Matter of Sprinreal Ltd ((in Liquidation)) v Section 821 of the Companies act 2014
| Jurisdiction | Ireland |
| Judge | Mr. Justice Quinn |
| Judgment Date | 09 December 2022 |
| Neutral Citation | [2022] IEHC 695 |
| Court | High Court |
| Docket Number | [2020 16 COS] |
[2022] IEHC 695
[2020 16 COS]
THE HIGH COURT
85. I shall make an order that for a period of three years the respondent be disqualified from being appointed or acting as a director or other officer, statutory auditor, receiver, liquidator or examiner or being in any way, whether directly or indirectly, concerned or taking part in the promotion, formation or management of each of the following;
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(a) A company within the meaning of Section 819(6) of the Act
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(b) Any friendly society within the meaning of the Friendly Societies Acts 1896 to 2014
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(c) Any society registered under the Industrial and Provident Societies Acts 1893 to 2014.
86. The Restriction Declaration will continue in force.
87. The matter will be listed before this Court one week after the electronic delivery of this judgment for any submissions as to costs.
Judgment of Mr. Justice Quinn delivered on 9 December 2022
The applicant seeks directions following a finding made by this Court on 4 July 2022 that the respondent has acted in breach of an order of this Court made 14 February 2022 declaring that the respondent shall not for a period of five years be appointed or act in any way, whether directly or indirectly, as a director or secretary or be concerned or take part in the promotion or formation of any company unless that company meets the requirements as to capital stipulated in s. 819(3) of the Companies Act 2014 (the “Restriction Declaration”).
On 1 October 2015 an order was made by this Court (MacEochaidh J.) for the winding up of Sprinreal Limited (“the Company”) and appointing the applicant liquidator.
On 9 March 2020 the applicant issued a Notice of Motion pursuant to s. 819 of the Act, for a restriction declaration. Following numerous adjournments and exchanges of affidavits, that application was heard on 14 February 2022 and the Restriction Declaration was made on that day.
The court also ordered pursuant to s. 820 (2) of the Act that the applicant recover against the respondent the costs of the application, to be adjudicated in default of agreement, and a sum of €6,220 together with such sum as may be due in respect of VAT thereon in respect of the costs and expenses of the investigation incurred by the applicant.
Arising from events described later in this judgment, on 10 June 2022, the applicant issued an application for the following orders:—
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(i) A declaration that the respondent is in breach of the Restriction Declaration in continuing to hold the position of a director of companies that do not meet the criteria of s. 819(3) of the Act.
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(ii) Directions pursuant to s. 821(2) (b) of the Act including
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(i) That the applicant refer the matter to the Director of Public Prosecutions and/or the Companies Registration Office and/or the Office of the Director of Corporate Enforcement and/or;
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(ii) That an order be made pursuant to s. 842 of the Act that the respondent shall not, for such period as the Court sees fit, be appointed or act as a director or other officer, statutory auditor, receiver, liquidator or examiner or be in any way, whether directly or indirectly concerned or take part in the promotion, formation or management of any company within the meaning of s. 819 of the Companies Act 2014 or any friendly society within the meaning of the Friendly Societies Acts 1896 – 2014 or any society registered under the Industrial and Providence Societies Acts 1893 – 2014, (“a disqualification order”).
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This application was grounded on an affidavit sworn by the applicant on 24 May 2022. When the matter came before the court on 4 July 2022, the respondent appeared in person to oppose the application. He was granted leave to file a replying affidavit. That affidavit was opened to the court and submissions were made by the applicant by his counsel and by the respondent in person.
Having considered the affidavit evidence and the submissions on that day, the court made a declaration to the effect that the respondent was in breach of the restriction declaration made on 14 February 2022.
Neither the Restriction Declaration made on 14 February 2022 or the finding and order made on 4 July 2022 were appealed. Therefore, it is not necessary on this application to rehearse all of the evidence and submissions which were considered, but I shall summarise a number of those later, as they are relevant to the directions now sought by the applicant.
When the matter was before the court on 4 July 2022, having made the finding that the respondent was acting in breach of the restriction declaration, I adjourned the matter to 24 October 2022 before deciding on what directions or further orders would be made. This adjournment was granted in light of submissions by the respondent that he intended to remedy the breach. I directed that any affidavit to evidence such remedy of the breach be filed by 30 September 2022. No affidavit was filed by 30 September 2022.
When the matter came before the court on 24 October 2022, there was no appearance by or on behalf of the respondent.
I adjourned the matter in his absence to 7 November 2022. On 7 November 2022, the applicant was represented, and the respondent appeared in person and sought leave to file and deliver an affidavit which he said had been sworn on Friday 4 November 2022.
The applicant objected to the late delivery of any such affidavit. Having considered submissions I adjourned the matter to 14 November 2022 and gave leave to the respondent to file his further affidavit in advance of the adjourned hearing.
In his affidavit grounding this application sworn on 24 May 2022, the applicant says that after the making of the Restriction Declaration, he wrote on 23 March 2022 to fourteen companies of which the respondent was listed as a current director, notifying them of the Restriction Declaration. Initially he received no responses. Later he received a telephone call from Laura Carroll, the respondent's daughter, who is a director of one of the companies, namely The Eighth Degree Consulting Limited. Ms. Carroll informed the applicant that she was not aware of the Restriction Declaration and that she would take steps to remove the respondent as a director of the company of which she was a director. A Form B 10 recording the resignation of the respondent as a director of that company was filed in the Companies Registration Office on 30 March 2022.
The applicant's solicitors Dillon Eustace, then wrote to the respondent notifying him of the breach and that unless he provided proof of resignation from the relevant companies or the alternative proof of appropriate capitalisation complying with s. 819(3) of the Act, the matter would be brought to the attention of the court.
Through further correspondence it transpired that steps had been taken to obtain the necessary clearance from Revenue to proceed with a request for voluntary strike off in respect of nine of the companies, namely Kylefort Limited, Gellbay Limited, Xzerv Group Limited, Zanalon Limited, Venamar Limited, DCDR Pharmacy Limited, Tipp Medical Group Limited, Tipp Town Pharmacy Limited and MYLD Pharmacy Holdings Limited.
The respondent resigned as a director of four of the companies, Xzerv Limited, Glamford Limited, Galsur Limited and The Eighth Degree Consulting Limited.
In three of these companies, Xzerv Limited, Glamford Limited and Galsur Limited, the respondent's wife, Yvonne Carroll, is a director and his son Darragh Carroll is the secretary.
The respondent's daughter Laura Carroll, together with others, is a director of The Eighth Degree Consulting Limited.
The respondent did not resign as a director of Tipp Medical Limited. By email of 29 April 2022 to the applicant he said:—
“The issued share capital of Tipp Medical Limited is being increased from €1075 (comprising €107,500 ordinary shares of €0.01 each) to €100,000 (comprising 10 million ordinary shares of €0.01 each) by converting and capitalising part of the share premium account which is currently €1,138,964”. (emphasis added)
In his grounding affidavit for this application, the applicant says that since February 2020, the respondent had “alluded to the imminent prospect of being in a position to invest €100,000 in the company, however this has never materialised”. The applicant said that the respondent's stated intention to capitalise Tipp Medical Limited in line with s. 819 (3) by the end of June did not change his position in respect of the jeopardy which may be caused to a company or creditors by the respondent continuing to act as a director in breach of the Restriction Declaration.
The applicant said that he had formed the opinion that the respondent was continuing to act as a director of companies in breach of the Restriction Declaration and jeopardising the interests of the companies or their creditors.
The applicant summarised the core complaint which he had made in the restriction application. He says that the Company did not have any trade of its own or its own bank account and was an artificial structure whereby PAYE/PRSI liabilities of the group of companies controlled by the respondent were “housed in a shell company” away from the trading entities and assets of the group. He said that the effect of the structure was to isolate Revenue liabilities in a company that had no ability to discharge those liabilities or any enforceable contractual arrangement to compel other entities in the group to do so.
In his replying affidavit sworn 4 July 2022, the respondent exhibited verification in the form of letters from Revenue that Revenue had no objection to the nine companies referred...
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