Re C.H.A. Ltd ((in Liquidation))
| Jurisdiction | Ireland |
| Judge | Justice Laffoy |
| Judgment Date | 25 January 1999 |
| Neutral Citation | [1999] IEHC 90 |
| Court | High Court |
| Date | 25 January 1999 |
[1999] IEHC 90
THE HIGH COURT
AND
Company - Winding up by the court - Appointment of liquidator - Outstanding rent - Costs, charges and expenses of winding up - Action by or against company - Priority of costs - Discretion of the court - ss. 244 and 390 Companies Act 1963 - Rules of the Superior Courts 1986, Order 74, r. 128
When a court gives leave to a liquidator to bring or defend an action by or against a company in liquidation, the court effectively pledges the assets of the company for the costs of the action. The costs of a successful plaintiff or defendant therefore rank in priority to all other claims.
In this case, the applicant had been given leave by the High Court to institute proceedings against the company for unpaid rent. The Circuit Court ordered payment of £5,000 in outstanding rent, plus £2,600 taxed costs.
The High Court ordered the liquidator to pay the applicant its taxed costs in priority to all other claims in the liquidation. The outstanding rent was an expense incurred in the winding up, and, pursuant to s.244 of the Companies Act, 1963, the priority of that claim vis à vis other claims was a matter for the discretion of the court. That priority would be decided at the time of the liquidator's application for final directions in the winding up. The court's discretion overrode the order of priority stipulated in Order 74 r. 128 of the Rules of the Superior Courts, 1986.
Justice Laffoy delivered on the 25th day of January.1999
By Order of this Court made on 21st September, 1988 it was ordered that C.H.A. Limited (the Company) he wound up by the Court and that F.J. Grey be appointed official Liquidator for the purposes of the said winding up. At the time of the winding up order the Company was in occupation of certain premises as tenant to triple D warehouses limited (the Applicant) and the Liquidator continued to occupy the premises after the commencement of the winding up. On the failure of the Liquidator to pay post liquidation rent claimed the landlord, the Applicant, in respect of post liquidation occupation of the premises in question, by the order of this Court made on 21st October, 1991 the Applicant was given leave to institute proceedings against Company for recovery of the rent.
The proceedings were brought in the Circuit Court in Cork and on 7th February, 1996 an order was made in the Circuit Court by His Honour Judge Moran that the Plaintiff should recover the sum of £5,000 together with the costs of the proceedings when taxed and ascertained. A sum of £2,000 had been lodged in Court by the Liquidator with the leave of this Court and it was ordered that that sum be paid out of the Plaintiff in part discharge of the degree.
The costs of the Circuit Court proceedings and witnesses expenses were subsequently taxed in the sum of £2,644.34.
On this application the Applicant claims the sum of £3,000, being the balance due on foot of the Circuit Court, as "costs, charges and expenses incurred in the winding up" within the meaning of Section 244 of the Companies Act, 1963(the Act of 1963) and claims that it is entitled to be the taxed costs of the proceedings in priority to all other claims in the liquidation.
I will deal with the question of the taxed costs first. In support of his contention that the Applicant is entitled to be paid the taxed costs in priority to all other claims in the winding up, Mr Hunt relied...
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