Re Connemara Mining Company Plc

• Jurisdiction: Ireland
• Judge: Ms. Justice Laffoy
• Judgment Date: 10 May 2013
• Neutral Citation: [2013] IEHC 225
• Court: High Court
• Docket Number: [2013 No. 30 COS]
• Date: 10 May 2013

Connemara Mining Co PLC, In re

IN THE MATTER OF CONNEMARA MINING COMPANY PLC

AND

IN THE MATTER OF THE COMPANIES ACTS 1963 - 2012

[2013] IEHC 225

[No. 30 COS/2013]

THE HIGH COURT

COMPANY LAW

Winding up

Petition - Locus standi - Whether fully paid up contributory had locus standi to bring petition - Whether company solvent - Whether company unable to pay its debts as they fall due - Brolrik v Sambah [2001] NSWSC 1171, (Unrep, New South Wales Supreme Court, Barrett J, 17/12/2001); Re Chesterfield Catering Co Ltd [1977] Ch 373; Clarit-Email Technology Partnership LLP v Vermillion International Investments Ltd [2009] EWHC (Ch) 388, [2009] BPIR 762; Re a Company [1983] BCLC 492; In re Connemara Mining Co Ltd [2013] IEHC 123, (Unrep, Laffoy J, 25/2/2013); Re Crigglesone Coal Co Ltd [1906] 2 Ch 327; Crowley v Northern Bank Finance [1981] IR 353; Re Expanded Plugs Ltd [1966] 1 WLR 514; H Albert de Bary and Co NV v O'Mullane (Unrep, Barron J, 2/6/1992); Re Irish Tourist Promotions Ltd (Unrep, Kenny J, 22/4/1974); Re La Plagne Ltd [2011] IEHC 91, [2012] 1 ILRM 203l Re Newman & Howard Ltd [1962] Ch 257; In re Othery Construction Ltd [1966] 1 All ER 145 and Re Rica Gold Washing Company (1879) 11 Ch D 36 considered - Companies Act 1963 (No 33), ss 213, 214, 215 & 216 - Petition dismissed (2013/30COS - Laffoy J - 10/5/2013) [2013] IEHC 225

Re Connemara Mining Company plc

Facts A petition was brought to wind up a company. The petitioner was the largest single shareholder in the company and contended that the company was unable to pay its debts as that it was just and equitable that the company be wound up (as per s. 213(f) of the Companies Act, 1963). On behalf of the company it was contended that the petitioner, as a contributory which owned fully paid-up shares, had no locus standi to seek to have the company wound up. In addition it was also contended that the company was solvent, was able to pay its debts and that no ground had been demonstrated for winding up the company on a just and equitable basis. There was also some dispute as to the financial state of the company with the petitioner submitting that there was a net current deficit of €80,000 and that there were doubts as to the company"s ability to continue as a going concern. It was also contended that the "cash flow test" should be applied by the court rather than the "balance sheet test".

Held by Laffoy J in refusing to grant the petition: Given the legislative framework set out in sections 213 and 215 of the 1963 Act there was no basis upon which the court could restrict the petitioner, as a fully paid up contributory, from bringing the present petition. Given the value of its intangible assets it would be impossible to conclude that the petitioner had established that the company was unable to pay its debts as they fell due. The evidence had shown that, with the exception of the remuneration of the directors, the company had discharged its liability to its creditors. The petitioner"s claim that the company should be wound up on the ground that it was just and equitable to do so because he no longer had confidence in the directors of the company was unstateable.

CONNEMARA MINING COMPANY PLC, IN RE UNREP LAFFOY 25.2.2013 2013 IEHC 123

RSC O.74 r10

COMPANIES ACT 1963 S213(E)

COMPANIES ACT 1963 S214(C)

COMPANIES ACT 1963 S213(F)

COMPANIES ACT 1963 S208

COMPANIES ACT 1963 S215

COMPANY, IN RE 1983 BCLC 492

RICA GOLD WASHING COMPANY 1879 11 CH 36

OTHERY CONSTRUCTION LTD, IN RE 1966 1 AER 145

CHESTERFIELD CATERING CO LTD, IN RE 1976 3 AER 294

NEWMAN & HOWARD LTD, IN RE 1961 2 AER 495

COMPANIES ACT 1948 S222(B)(UK)

COMPANIES ACT 1948 S213(B)(UK)

COMPANIES ACT 1963 S213(D)

CHARIT-EMAILTECHNOLOGY PARTNERSHIP LLP v VERMILLION INTERNATIONAL INVESTMENTS LTD 2009 EWHC (CH) 388

MCCANN & COURTNEY ON COMPANIES ACTS 1963-2012 P459

IRISH TOURIST PROMOTIONS LTD UNREP KENNY 22.4.1974 1966-1975/I-J/2347

LA PLAGNE LTD, IN RE 2012 1 ILRM 203 2011/31/8503 2011 IEHC 91

LYNCH FANNON & MURPHY CORPORATE INSOLVENCY & RESCUE 2012 2ED PARA 2.43

USSHER ON COMPANY LAW IN IRELAND 1986 P273

COMPANIES ACT 1948 S216(UK)

COMPANIES ACT 1948 S225(UK)

COMPANIES ACT 1948 S208(UK)

CRIGGLESTONE COAL CO LTD, IN RE 1906 2 CH 327

COMPANIES ACT 1963 S215 F

COMPANIES ACT 1963 S215 G

COMPANIES ACT 1963 S215 H

COMPANIES ACT 1963 S213 EA

COMPANIES ACT 1963 S213 FA

COMPANIES ACT 1963 S213 H

COMPANIES ACT 1963 S213 G

COMPANIES ACT 1963 S215 E

COMPANIES ACT 1963 S205

COMPANIES ACT 1963 S213(A)

COMPANIES ACT 1963 S213 (D)

COMPANIES ACT 1963 S213 (F)

COMPANIES ACT 1948 S224 (UK)

COMPANIES ACT 1948 S225(1)(UK)

ALBERT DE BARY & CO v NV O'MULLANE UNREP BARRON 2.6.1992 1992/10/2961

CROWLEY v NORTHERN BANK FINANCE CORPORATION 1981 IR 353

COMPANIES ACT 1963 S288(1)

COURTNEY LAW OF COMPANIES 3ED 2012 PARA 23.092

COMPANIES ACT 1963 S220

COMPANIES ACT 1963 S218

1 Judgment of Ms. Justice Laffoy delivered on 10th day of May, 2013.

Previous judgment

2 1. In a judgment delivered on 25 ^th February, 2013 ( [2013] IEHC 123) I outlined the then state of these proceedings arising from the presentation by Trampus Limited (the Petitioner) of a petition to wind up Connemara Mining Company Plc (the Company), a public limited company incorporated in this jurisdiction on 28 ^th March, 2006 and listed on the AIM sub-market of the London Stock Exchange. Having heard the petition, the purpose of this judgment is to determine whether the Company should be wound up on foot of that petition.

3 2. Since the previous judgment was delivered, the petition has been advertised in accordance with Order 74, rule 10 of the Rules of the Superior Courts (the Rules) and the directions given in the previous judgment. The Company did not avail of the opportunity of filing a further affidavit. Accordingly, the state of the evidence on the substantive issues is as it was when the previous judgment was delivered.

4 3. The only creditors and contributories of the Company who gave notice of intention to appear and appeared on the hearing of the petition and the wishes in relation to the petition expressed on their behalf were as follows:

5 (a) Davycrest Nominees, as a contributory holding 1,000,001 ordinary shares in the Company as nominee on behalf of the beneficial owner thereof, John Teeling (Mr. Teeling), who opposed the making of a winding up order on the instructions of Mr. Teeling;

6 (b) James Finn (Mr. Finn), a contributory holding 1,000,001 ordinary shares in the Company, who opposed the making of a winding up order;

7 (c) Mr. Teeling, as a creditor in the sum of €173,334, who, in that capacity, also opposed the making of a winding up order; and

8 (d) Mr. Finn, as a creditor in the sum of €150,000, who, in that capacity, also opposed the making of a winding up order.

9 As recorded in the previous judgment, Mr. Finn is a director and a secretary of the Company. Mr. Teeling is also a director of the Company. Between them, Mr. Finn and Mr. Teeling own approximately 7.78% of the issued share capital of the Company, whereas, as recorded in the previous judgment, the Petitioner has stated in the petition that it is the largest single shareholder in the Company and, at the date of the petition, beneficially owned 1,625,000 fully paid-up shares, representing a 6.32% interest in the Company. It appears from the list of shareholders put before the Court that the ownership of the remainder of the issued shares is spread over in excess of four hundred shareholders.

10 4. As was outlined in the previous judgment, the Petitioner seeks to have the Company wound up on two grounds: that the Company is unable to pay its debts, in reliance on s. 213(e) in combination with s. 214(c) of the Companies Act 1963 (the Act of 1963); and that the Court should form the opinion that it is just and equitable that the Company should be wound up in reliance on s. 213(f) of the Act of 1963.

11 The Company's response is that, as a contributory which owns fully paid-up shares, the plaintiff has no locus standi to seek to have the Company wound up. Further, the Company's position is that the Company is solvent and that it is able to pay its debts and no ground has been demonstrated for winding up the Company on a just and equitable basis.

The issues

12 5. The crucial factual issue which arises on the petition is the current financial state of the Company. The questions of law which were raised and very thoroughly analysed in the comprehensive written submissions furnished by each side are what criteria should be applied by the Court in determining the following questions:

13 (a) whether the Petitioner, as a fully paid up shareholder of the Company, has standing to bring a petition to wind up the Company;

14 (b) whether the Company is unable to pay its debts within the meaning of s. 213(f) and s. 214(c) of the Act of 1963; and

15 (c) whether it is just and equitable to wind up the Company.

16 Taking an overview of the matter, it is logical to outline first what is to be gleaned from the assertions made by the Petitioner and the evidence adduced as to the current financial state of the Company. As recorded in the previous judgment, the evidence on affidavit before the Court comprises -

17 (i) the verifying affidavit of Mark Gregory Hardy (Mr. Hardy), the sole director of the Petitioner, swom on 23 ^rd January, 2013;

18 (ii) the affidavit of Mr. Finn sworn on 14 ^th February, 2013, and

19 (iii) the replying affidavit of Mr. Hardy sworn on 18 ^th February, 2013.

Assertions and evidence on current financial state of the Company

20 6. In the petition and in the affidavit verifying the petition sworn by Mr. Hardy, the Petitioner relied on facts extrapolated from documents issued by the Company, all of which were in the public domain before the...