Print & Display Ltd v Liam Dowdall

• Jurisdiction: Ireland
• Judge: Mr. Justice Robert Haughton
• Judgment Date: 27 October 2021
• Neutral Citation: [2021] IECA 284
• Docket Number: Court of Appeal Record Number: 2020/188
• Court: Court of Appeal (Ireland)

In the Matter of Dominar Group Limited (In Voluntary Liquidation)

And in the Matter of Section 638 of the Companies Act 2014

Between/

Print & Display Limited

Applicant/Appellant

and

Liam Dowdall

Respondent

and

Michael Curneen

Notice Party

[2021] IECA 284

Woulfe J.

Haughton J.

Collins J.

Court of Appeal Record Number: 2020/188

High Court Record Number: 2018/279 COS

COURT OF APPEAL

Contents

Introduction	- 2 -
Background to the High Court Application	- 3 -
(1) P&D Polska	- 5 -
(2) The PPKZ proceedings	- 7 -
(3) The Osmanska 7 Site	- 11 -
Cross examination of the respondent	- 13 -
Sale process for Osmanska 7 site	- 15 -
Post High Court sale of site	- 15 -
Submissions in the High Court	- 16 -
The High Court Judgment	- 17 -
Grounds of Appeal	- 33 -
Appellant's Submissions	- 36 -
Fresh Evidence – the winding up of Grosbeak	- 39 -
Respondent's submissions	- 44 -
Reasons for decision to dismiss appeal	- 44 -
The Fresh Evidence	- 56 -
Costs	- 59 -

JUDGMENT of Mr. Justice Robert Haughton delivered on the 27th day of October, 2021

Introduction

1 . This appeal which was heard by this court on 17 June 2021 is an appeal from the judgment of the High Court (Sanfey J.) delivered on the 8th day of May 2020, whereby he refused to grant an order pursuant to s. 638(1) of the Companies Act, 2014 for the removal of the respondent as liquidator of Dominar Group Limited (in Voluntary Liquidation) (“the Company”).

2 . Section 638 provides:-

“638 (1) In any winding up, the Court may, on the application by a member, creditor, liquidator or the Director or on its own motion –

• (a) appoint a liquidator if from any cause whatever there is no liquidator acting, or

• (b) on cause shown, remove a liquidator and appoint another liquidator.

(2) Where the Court makes an order under ( subsection 1), it may give such consequential directions, including directions as to the delivery and transfer of the seal, books, records and any property of the company, as it thinks fit.”

The application to the High Court in this instance sought to show cause pursuant to subsection 1(b)

3 . In the unanimous decision of this court, delivered in open court on 24 June 2021, the substantive appeal was dismissed, and the court indicated that a judgment would follow setting out the reasons for its decision, and its proposals in respect of costs orders. The reason the court took this approach was because the liquidation was ongoing and it wished to a avoid a situation in which any delay in the delivery of its decision might impact or further delay the completion of the liquidation of the Company, including one of its subsidiaries, bearing in mind that the respondent was appointed liquidator in 2008 and the liquidation work was nearing completion. Accordingly, this judgment sets out reasons for the decision.

Background to the High Court Application

4 . The Company operated as a holding company for subsidiaries principally involved in the business of printing billboard advertising displays. The Company has two shareholders, namely the appellant and Mr. Curneen, who continue to be equal 50% shareholders in the Company. Prior to being placed in liquidation the subsidiary companies included two Polish companies, namely Print & Display (Polska) Sp. Zo. o. (“P&D Polska”) and P&D Polska's 100% owned subsidiary Grosbeak Sp. Zo. o. (“Grosbeak”). Both of these Polish companies were primarily managed by Mr. Curneen.

5 . The appellant commenced oppression proceedings under s. 205 of the Companies Act, 1963 against Mr. Curneen due to a breakdown in their relationship in and about the management of the affairs of the Company. Those proceedings were compromised in a Settlement Agreement entered into between the appellant and Mr. Curneen on 3 March 2008. In Clause 1, the appellant and Mr. Curneen agreed to the appointment of a voluntary liquidator of the Company “for the purpose of realising the assets of that company” and that the liquidation would proceed as a members' voluntary winding up. Clause 6, for the avoidance of doubt, stated that the liquidator should realise the assets of the subsidiary companies, including P&D Polska and Grosbeak. In Clause 7 it was agreed that an insolvency partner of BDO Simpson Xavier should be appointed voluntary liquidator, and in Clause 8 that the directors of the Company would each swear a Declaration of Solvency.

6 . Pursuant to the said Settlement Agreement, by resolution dated 9 April 2008 the respondent, a chartered accountant in Smith & Williamson, was appointed as liquidator of the Company

7 . Mr. Jim Conway (“Mr. Conway”), a director of the appellant who swore a number of affidavits on behalf of the appellant in these proceedings, averred in his first affidavit sworn on 16 July 2018 that the s. 205 proceedings were brought due to “a serious breakdown in the relationship between the Applicant and Mr. Curneen”, and that interim injunctive relief was obtained to restrain Mr. Curneen from giving effect to resolutions passed by the Company sanctioning “huge salary and pension contribution increases to Mr. Curneen, retrospective payments to him for several years in respect of salary and pension payments, a one-off bonus payment of €300,000, future bonus payments…”.

8 . Although Mr. Curneen and a fellow Director of P&D Polska, Ms. Katarzyna Frejlichowska, had control of the day to day management of the Polish business, the Settlement Agreement made no provision for the alteration or replacement of the existing management structure of the Polish subsidiaries during the realisation of assets. On 8 May 2008 the respondent entered into a Memorandum of Understanding (“the MOU”) with Mr. Curneen and Ms. Frejlichowska which provided that as directors they should remain in situ, subject to certain restriction and reporting obligations. The trial judge found that there was no evidence before the High Court that the appellant was unaware of, or objected to, the liquidator's reliance on the existing management of the Polish subsidiary companies on the basis of the MOU.

9 . Following his appointment, the respondent was furnished with a Declaration of Solvency which recorded the directors' view at that time that the company would be in a position to pay its debts within 12 months and that it would yield a surplus of €631,316.

10 . The main assets of the Company or its subsidiaries which req uired realisation were:-

• (1) the P&D Polska trading printing business operated through P & D Polska;

• (2) an undeveloped parcel of land located in Osmanska 7, Warsaw, held through P&D Polska's 100% Polish subsidiary Grosbeak (“the Osmanska 7 Site”); and

• (3) A claim being taken through the courts in Poland by P&D Polska/Grosbeak against Polskie Pracownie Konserwacji Zabytkow S.a. (“PPKZ”), the Warsaw City's public authority. This claim was for compensation and reimbursement of costs arising from PPKZ's failure, prior to sale, to disclose the existence of restitution claims filed by ex-owners of the Osmanska 7 Site or their heirs. These are restitution claims of a sort that became common in Poland and relate to public body expropriation of property from private individuals.

11 . It is the manner in which the respondent addressed the realisation of each of these assets that gave rise to the appellant's dissatisfaction with the respondent and ultimately the commencement of these proceedings for removal of the respondent and the appointment of Mr. Myles Kirby, Chartered Accountant, as replacement liquidator. The proceedings were commenced by notice of motion issued on 16 July 2018. It is appropriate therefore to give some further detail in relation to the respondent's dealings with each of these matters. Before doing so it should be noted that at this point in time the respondent has dealt with all of the Company's creditors and has disposed of all of the assets in the liquidation, including the P&D Polska trading business and the Osmanska 7 site.

12 . By the time the proceedings issued the respondent had realised considerably more than the estimated surplus of €631,316, and had made distributions to the appellant totalling €1,649,226.60, and he has since achieved further realisations following sale of the Osmanska 7 site. The respondent's handling of the Company's liabilities, which is summarised in para. 10 of the replying affidavit which he swore on 2 November 2018, is also not in dispute. However from 16 December 2013 Mr. Conway raised concerns in relation to delays in realisation of the Osmanska 7 Site, and costs and delays in the liquidation, and from 2014 Mr. Conway and/or the appellant's solicitors pursued these issues and concerns over a perceived failure to achieve optimal price for assets, failure to protect the Osmanska 7 site, a lack of transparency, liquidator's remuneration, delay, and allegations of hostility demonstrated by the respondent towards the appellant and its solicitors. Ultimately these concerns prompted the issue of these proceedings.

13 . Some 12 affidavits were sworn before the matter came before the High Court, where it was heard over the course of 4 days in January/February 2020. The hearing included cross-examination of the respondent on his affidavits, limited leave in that regard having been granted by order made on 27 July 2019 (O'Connor J.) after a contested application. The leave granted was limited to whether the respondent failed to preserve and safeguard the assets of the Company, and the financing of the removal of waste from the Osmanska 7 site. O'Connor J. also granted leave to the respondent to cross-examine Mr. Conway, but in the event only the respondent was cross-examined.

14 . To understand the nature of the appellant's application and the thrust of argument in this appeal it is appropriate to refer in some detail to the...