Re Cayman International Bank and Trust Company Ltd

JurisdictionIreland
JudgeMs. Justice Finlay Geoghegan
Judgment Date09 March 2006
Neutral Citation[2006] IEHC 67
CourtHigh Court
Docket Number[2006 No. 27 COS]
Date09 March 2006

[2006] IEHC 67

THE HIGH COURT

[RECORD NO. 27 COS/2006]
DIRECTOR OF CORPORATE ENFORCEMENT v COLLERY
IN THE MATTER OF THE COMPANIES ACTS 1963 TO 2005
AND IN THE MATTER OF PART II OF THE COMPANIES ACT, 1990,
AND SECTIONS 8 AND 17
AND IN THE MATTER OF ANSBACHER (CAYMAN) LIMITED
(FORMERLY GUINNESS MAHON CAYMAN TRUST LIMITED,
ANSBACHER LIMITED, AND CAYMAN INTERNATIONAL
BANK AND TRUST COMPANY LIMITED)
BETWEEN/
THE DIRECTOR OF CORPORATE ENFORCEMENT
APPLICANT

AND

PADRAIG COLLERY
RESPONDENT

COMPANIES ACT 1990 S160(2)(e)

COMPANIES ACT 1990 S160(7)

COMPANIES ACT 1990 S22

DIRECTOR OF CORPORATE ENFORCEMENT v D'ARCY UNREP KELLY 26.10.2005

LO-LINE ELECTRIC MOTORS LTD 1988 2 ALL ER 692 1988 CH 477 1988 3 WLR 26

CAHILL (OFFICIAL LIQUIDATOR) v GRIMES 2002 1 IR 372

DUNLECKNEY, IN RE UNREP CARROLL 18.2.1999 1999/10/2397

HEFFERON KEARNS LTD (NO 1), IN RE 1993 3 IR 177

COMPANIES ACT 1990 S352

COMPANIES ACT 1990 S353

COMPANIES ACT 1990 S355

COMPANIES ACT 1990 S357

COMPANIES ACT 19901990 PART 11

SEVEN OAKS STATIONERS (RETAIL) LTD, IN RE 1991 CH 164 1991 3 AER 578

COMPANIES ACT 1990 S160(9)(a)

COMPANIES ACT 1990 S150

WESTMID PACKAGING SERVICES LTD 1998 2 AER 124 1998 2 BCLC 646

COMPANY LAW

Directors

Disqualification - Conduct - Fitness to manage company - Mitigation - Re NIB; Director of Corporate Enforcement v D'Arcy [2005] IEHC 333 (Unrep, Kelly J, 26/10/2005) and In re Westmid Packing Services Ltd [1998] 2 All ER 124 followed - In re Dunleckney Ltd (Unrep, Carroll J, 18/2/1999) considered - Companies Act 1990 (No 33), s 160 - 9 year disqualification granted - (2006/27COS - Finlay Geoghegan J - 9/3/2006) [2006] IEHC 67

Re Ansbacher (Cayman) Ltd; Director of Corporate Enforcement v Collery

the applicant applied, pursuant to section 160 of the Companies Act 1990, to the High Court for an order disqualifying the respondent from being concerned in the management of any company on the basis of conclusions contained in a report of inspectors appointed to inquire into the affairs of Ansbacher (Caymen) Ltd. The respondent did not contest the application.

Held by Ms Justice Finlay Geoghegan in making a disqualification order in respect of the respondent for a period of nine years that, notwithstanding the fact that an application under section 160 of the Act of 1990 was uncontested, the onus was still on the applicant to satisfy the court that the conduct in question was such as to make the person concerned unfit to be concerned in the management of a company. The principles applicable to determining the appropriate period of disqualification were: (1) the primary purpose of a disqualification order was not to punish the individual but to protect the public; (2) the period of disqualification should reflect the gravity of conduct as found by the inspectors which made the respondent unfit to be concerned in the management of a company; (3) the period of disqualification should contain deterrent elements; (4) a period of disqualification in excess of ten years should be reserved for particularly serious cases; and (5) the court should firstly assess the correct period in accordance with the foregoing and then take into account mitigating factors prior to fixing the actual period of disqualification.

Reporter: P.C.

1

Judgment of Ms. Justice Finlay Geoghegan delivered the 9th day of March, 2006.

2

This is an application pursuant to s. 160(2)(e) of the Companies Act, 1990 brought by the Director of Corporate Enforcement ("the Director") seeking a disqualification order against the respondent, Mr. Collery.

3

Section 160(2)(e) provides:

"160(2) Where the court is satisfied in any proceedings or as a result of an application under this section that û"

4

...

5

(e) in consequence of a report of inspectors appointed by the court or the Director under the Companies Acts, the conduct of any person makes him unfit to be concerned in the management of a company; or

6

...

7

the court may, of its own motion, or as a result of the application, make a disqualification order against such a person for such period as it sees fit."

8

The application arises in consequence of the Report of the Inspectors appointed to inquire into the affairs of Ansbacher (Cayman) Limited, published by order of the court made on 24th June, 2002.

9

The Director relies exclusively on the content of the Report and submits that certain of the findings and conclusions therein establish, as a matter of probability, that Mr. Collery was guilty of a serious lack of commercial probity in relation to the affairs of the company under investigation, such that it makes him unfit to be concerned in the management of a company within the meaning of s. 160(2)(e) of the Act of 1990.

10

Prior to the commencement of this application the Director gave notice to Mr. Collery as required by s. 160(7) of his intention to make the application. The Director also indicated he would consider any representations which Mr. Collery might wish to make within a period of ten days. No representations were made to the Director by or on behalf of Mr. Collery.

11

Mr. Collery has not sought to put any evidence before the court in response to this application. He was represented by solicitor and counsel. On his instructions, counsel on his behalf did not seek to contest any of the findings in the Inspectors" Report. Neither did he seek to dispute that the contents of the Report in relation to him are such that the Court should accede to the Director's submission that it evidences a lack of commercial probity on his part to an extent that it makes him unfit to be concerned in the management of a company within the meaning of s. 160(2)(e).

12

Notwithstanding such lack of opposition, counsel for the Director correctly submitted that the onus is on the Director to satisfy the court that the conduct of Mr. Collery referred to in the Inspectors" Report makes him unfit to be concerned in the management of a company.

13

The Inspectors" Report is relied upon by the Director in accordance with s. 22 of the Companies Act, 1990 which provides:

"22.-A document purporting to be a copy of a report of an inspector to be evidence, appointed under the provisions of this Part shall be admissible in any civil proceedings as evidence û

(a) of the facts set out therein without further proof unless the contrary is shown, and

(b) of the opinion of the inspector in relation to any matter contained in the report."

14

Counsel for both parties were in agreement that the principles to be applied by the Court in determining whether the conduct of Mr. Collery referred to in the Report makes him unfit to be concerned in the management of the company were those set out recently and comprehensively by Kelly J. in The Director of Corporate Enforcement v. D'Arcy (Unreported, the High Court, 26th October, 2005). In that judgment Kelly J. considered an application by the Director, inter alia under s. 160(2)(e) arising out of the Report of the Inspectors into the affairs of National Irish Bank and National Irish Bank Financial Services Limited, published by order of the court of 23rd July, 2004. In considering whether the findings in that Report made Mr. D'Arcy unfit to be concerned in the management of the company, Kelly J. referred to the well known dictum of Browne-Wilkinson V.C. (as he then was) in re: Lo-Line Limited [1988] Ch. 477 where he said:

"What is the proper approach to deciding whether someone is unfit to be a director? The approach adopted in all the cases to which I have been referred is broadly the same. The primary purpose of the section is not to punish the individual but to protect the public against the future conduct of companies by persons whose past records as directors of insolvent companies have shown them to be a danger to creditors and others. Therefore, the power is not fundamentally penal. But, if the power to disqualify is exercised, disqualification does involve a substantial interference with the freedom of the individual. It follows that the rights of the individual must be fully protected. Ordinary commercial misjudgement is in itself not sufficient to justify disqualification. In the normal case, the conduct complained of must display a lack of commercial probity, although I have no doubt that in an extreme case of gross negligence or total incompetence disqualification could be appropriate."

15

As pointed out by Kelly J., this passage was cited with approval by Murphy J. in the Supreme Court in re: Readymix Limited (in liquidation) [2002] 1 I.R. 372 where he stated:

"It is I believe a correct statement of the law and represents a proper approach to the application and interpretation of s. 160 of the Companies Act 1990."

16

I would respectfully agree with the view expressed by Kelly J. that, whilst the observations of Browne-Wilkinson V.C. were related to the unfitness of a director and dealt with an insolvent company, that a similar line of reasoning is applicable to the question of the disqualification of a person whose conduct is alleged to have made him unfit to be concerned in the management of a company.

17

On the facts of this application the Director submits that the findings in the Report in relation to Mr. Collery show a lack of commercial probity.

18

An issue raised by the Court in the course of the hearing was the date from which the Court should have regard to the conduct of Mr. Collery as found in the Inspector's Report. Section 160 of the Act of 1990 came into force on 1st August, 1991. The Court raised the issue as to whether it was permissible to take into account findings in respect of conduct prior to that date having regard to the decision of Carroll J. in re: Dunleckney Limited (Unreported, the High Court, 18th February, 1999) applying the principles set out by Murphy J. in ...

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14 cases
  • Wallace v Cassidy
    • Ireland
    • High Court
    • 2 December 2016
    ...the disqualification. The Court identified and applied the principles as observed in Re Ansbacher?Dir. Of Corp. Enforcement v. Collery [2007] 1 I.R. 580 at 589 for the period of disqualification under s. 160, sub-s.2 of The Companies Act, 1990 to the effect that the period of disqualificati......
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1 books & journal articles
  • Restriction, Disqualification and the Companies Act 2014: A Reformatory Analysis
    • Ireland
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    • 1 January 2015
    ...Corporate Enforcement v Seymour.82 Here it was 75ibid (Finlay Geoghegan J). 76[2005] IEHC 333. 77[2005] IEHC 443. 78ibid (O’Leary J). 79[2006] IEHC 67. 80ibid (Finlay Geoghegan J). 81ibid (Finlay Geoghegan J). 82Seymour (n 62). [2015] COLR agreed that a high starting point, in this case 12 ......

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