Re City Car Sales Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Geoghegan
• Judgment Date: 01 January 1995
• Neutral Citation: 1994 WJSC-HC 2285
• Docket Number: No 2419P/1989
• Court: High Court
• Date: 01 January 1995

1994 WJSC-HC 2285

THE HIGH COURT

No 2419P/1989

CITY CAR SALES LTD

IN THE MATTER OF CITY CAR SALES LIMITED (IN RECEIVERSHIP AND LIQUIDATION)

AND

IN THE MATTER OF THE COMPANIES ACTS 1963 TO 1990

Citations:

CONVEYANCING ACT 1881 S24

COMPANIES ACT 1963 S318

CONVEYANCING ACT 1881 S19

CONVEYANCING ACT 1881 S20

CONVEYANCING ACT 1881 S21

CONVEYANCING ACT 1881 S22

CONVEYANCING ACT 1881 S23

CONVEYANCING ACT 1881 S19(1)

CONVEYANCING ACT 1881 S19(2)

CONVEYANCING ACT 1881 S24(6)

BUTTERWORTHS FORMS & PRECEDENTS 4ED V14 885

LIGHTMAN & MOSS ON THE LAW OF RECEIVERS OF COMPANIES PARA 21-08

LAW OF PROPERTY ACT 1925 S109 (UK)

MARSHALL V COTTINGHAM 1981 3 AER 8

POTTERS OILS LTD (NO 2), IN RE 1986 1 AER 890

GREY CAINE LTD, IN RE 1946 CH 269

CONVEYANCING ACT 1881

LAW OF PROPERTY ACT 1925 S109(6) (UK)

Synopsis:

COMPANY

Receiver

Appointment - Remuneration - Rate - Increase - Application - Discretion of court - Remuneration not fixed by debenture - Statutory percentage inappropriate to services of receiver - Company in liquidation - Receiver's claim contested by liquidator - Conveyancing Act, 1881, ss. 19, 24 - Companies Act, 1963, s. 318 - (1989/2419 P - Geoghegan J. - 5/10/94)

|In re City Car Sales Ltd.|

RECEIVER

Remuneration

Rate - Increase - Application - Court - Discretion - Rate not fixed by debenture - Statutory rate of 5% insufficient - Percent age rate increased - (1989/2419 P - Geoghegan J. - 5/10/94)

|In re City Car Sales Ltd.|

1 Judgment of Mr. Justice Geoghegan delivered the5th day of October 1994.

2 City Car Sales Limited was a company which went into receivership with Mr James Cormican, a Chartered Accountant, being appointed receiver and manager. The company also went into liquidation and Mr Rubert J. McElwee was appointed official liquidator. Mr Cormican as receiver retained out of the gross proceeds of assets realised by him a sum of £37,300.00 receiver's fees. Mr McElwee as the official liquidator has now brought an application to this Court seeking the following reliefs:

3 1. An Order providing directions to the official liquidator as to the amount which the Respondent, James Cormican, is entitled to retain as receiver appointed over the assets and undertaking of the company pursuant to a debenture dated the 27th of May, 1983 issued by the company to Allied Irish Banks Pic. towards his remuneration and the expenses of the said receivership pursuant to the terms of the said debenture and Section 24 of the Conveyancing Act, 1881.

4 2. If necessary an Order pursuant to Section 318 of the Companies Act, 1963 fixing the amount of the receiver's remuneration.

5 3. Subject as aforesaid an Order directing the said James Cormican as receiver of the said company to repay the official liquidator for the benefit of the winding up of the company any sum retained by him towards the expenses and remuneration of the receivership in excess of such amount as may be so determined or fixed by the Court.

6 4. Such further directions or Order as may be just or necessary in the circumstances including an Order providing for the costs of the application.

7 The case being made by the official liquidator is that by virtue of the terms of the debenture under which he was appointed, the receiver was entitled only to a five per cent commission calculated in the manner set forth in Section 24 of the Conveyancing Act, 1881 and that on that basis his commission would amount to no more than £15,493.81. If the receiver was confined to a commission calculated under the 1881 Act, there would be some minor controversy between the parties as to how the calculation would be arrived at and in particular as to what items of cost and expense would have to be borne by the receiver himself and included in his commission but it is not necessary to deal with those matters at this stage at least. Before I outline the arguments made on behalf of the receiver, I think it necessary to set out the relevant clauses in the Deed of Appointment of the receiver, the relevant debenture and the relevant statutory provisions.

8 The Deed of Appointment of the receiver is dated the 31st of March, 1989 and under it Mr Cormican is appointed "receiver and manager of and over the undertaking and all the property and assets of the company as charged by the debenture upon the terms and with and subject to the powers and provisions contained in and conferred by the debenture".

9 The debenture confers fairly standard powers on the receiver and manager and then goes on to provide as follows:

"And all monies received by such receiver shall, after providing for the matters specified in the first three paragraphs of clause 8, Section 24 of the Conveyancing Act, 1881 and for the purposes aforesaid, be applied in or towards satisfaction of the debenture; and the foregoing provisions in this condition shall take effect as by way of variation and extension of the provisions of Sections 19 to 24 (inclusive) of the said Act which provisions so varied and extended shall be regarded as incorporated herein. The receiver so appointed shall be the agent of the company and the company shall be solely responsible for the acts or defaults of such receiver and for his remuneration."

10 It is quite clear that Mr Cormican was bound by these provisions as was the bank which appointed him. But to understand the effect of the above cited clause in the debenture, it is necessary to refer specifically to some of the provisions in the Conveyancing Act, 1881. Section 19 of the 1881 Act dealing with powers of a mortgagee where the mortgage is made by deed specifically confers

"A power when the mortgage money has become due to appoint a receiver of the income of the mortgage property, or any part thereof".

11 This is one of a number of powers conferred on such mortgagees by Section 19 (1) of the Act. Subsection (2) of the same section goes on to provide as follows:

"The provisions of this Act relating to the foregoing powers, comprised either in this section, or in any subsequent section regulating the exercise of those powers, may be varied or extended by the mortgage deed, and, as so varied or extended, shall, as far as may be, operate in the like manner and with all the like incidents, effects, and consequences, as if such variations or extensions were contained in this Act".

12 I now move to Section 24 of the Act which regulates the appointment, powers, remunerations and duties of a receiver appointed under the Act which, as will have been noted, would be a receiver of income only. In relation to such a receiver Section 24 (6) provides as follows:

"The receiver shall be entitled to retain out of any money received by him, for his remuneration, and in satisfaction of all costs, charges, and expenses incurred by him as receiver, a commission at such rate, not exceeding five per centum on the gross amount of all...