Re Dublin Cinema Group Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Charleton
• Judgment Date: 25 March 2013
• Neutral Citation: [2013] IEHC 147
• Docket Number: Record No:551/2012 COS
• Court: High Court
• Date: 25 March 2013

Dublin Cinema Group Ltd, In re

In the matter of Dublin Cinema Group Limited

-and-

In the matter of the Companies Acts 1963 - 2012

[2013] IEHC 147

Record No:551/2012 COS

THE HIGH COURT

COMPANY LAW

Practice and procedure

Statutory interpretation - Winding up - Petition to wind up pursuant to s 213(f) of Act of 1963 - Discretion - Whether court entitled to make orders other than granting or dismissing petition - Companies Act 1963 (No 33) ss 205, 213 and 216 - Ruling given (2012/551COS - Charleton J - 25/3/2013) [2013] IEHC 147

In re Dublin Cinema Group Ltd

Facts: The petitioner and the respondent had been involved in a group of companies with many family ties and relations had broken down. A petition had been made to wind up the Dublin Cinema Group and a question arose as to the power of the Court to make an order. The Court had previously delivered an ex tempore ruling and the written reasons for that decision were now delivered by the Court. It had been argued on behalf of the petitioner that the Court only had power to wind up the company or to refuse the petition pursuant to s. 213 of the Companies Act 1963, as amended. The Court considered whether it was just and equitable to wind up a company or whether there was any other order available to the Court under s. 216 which would be more just and equitable.

Held by Charleton J. that instead of winding up a company or dismissing a winding up petition the Court was also entitled to make such order as appropriate between shareholders, provided it was just and equitable with a view to reordering the company so that it could survive profitably. Thus it could make an order pursuant to s. 216 for a share buy-out, which required oral evidence. The case had been subsequently settled.

COMPANIES ACT 1963 S231(F)

COMPANIES ACT 1963 S231(G)

COMPANIES ACT 1963 S205

COMPANIES ACT 1963 S216

USSHER COMPANY LAW IN IRELAND DUBLIN 1986

COURTNEY THE LAW OF COMPANIES DUBLIN 3ED 2012 P631

COLGAN v COLGAN & COLGAN UNREP COSTELLO 22.7.1993

EBRAHIMI v WESTBOURNE GALLERIES LTD 1973 AC 360

WESTWINDS HOLDING CO LTD UNREP KENNY 21.5.74

COMPANIES ACT 1963 S213(A)

COMPANIES ACT 1963 S213(B)

COMPANIES ACT 1963 S213(C)

COMPANIES ACT 1963 S213(D)

COMPANIES ACT 1963 S213(F)

Judgment of

Mr. Justice Charleton

1 On the 4^th of March 2013, which was the first day of the hearing of this petition to wind up Dublin Cinema Group Limited, an issue arose as to what order the High Court was empowered by the Companies Act 1963 to make. Following extensive argument, I gave an ex tempore ruling. These are my written reasons for that decision.

2 The petitioner, Paul Anderson and the respondent, Paul Ward have a strong family connection. The differences between them do not arise out of malice. The two men are for many years directors of and members of Dublin Cinema Group Limited. This is a very successful company with many employees. The petitioner and the respondent and the employees of the company have given much entertainment to the people of Dublin over generations. Their family forbears in the company were rightly admired for their work, as are they. The company runs, among other cinemas, the Savoy Cinema in O'Connell Street. The respondent and the petitioner separately have plans to develop other cinema projects. On these projects, the involvement of Dublin Cinema Group Limited in them and as to the appropriate corporate vehicle for them, they cannot agree. Prior to the present difficulties they worked together harmoniously in what began as a family concern. After many years as colleagues, these and other differences arose between them. There has up to now been no possibility of reconciliation between them or of the settlement of these proceedings. This is demonstrated by the two failed attempts to reach any agreed resolution of the case through professional mediation prior to the commencement of this trial.

3 The application in this petition is to wind up the company under section 213(f) of the Act of 1963 as amended. The power to wind up a company under that subsection is on what is called the just and equitable ground. That is the only application before this Court. No alternative relief is sought. It is argued on behalf of the petitioner Paul Anderson, that the only power of a court, once such a petition is presented, is to either wind up the company or to refuse the petition. If the petition had been brought under section 213(g) of the Act of 1963 on the ground that the company's affairs were being conducted in a manner oppressive to, or in disregard of the interests of, a member, the court would, it is argued, have had more ample powers linking in to section 205 of the Act. Because that subsection was not used, it is urged on behalf of the petitioner that the court has no such amplitude of powers. Quite often in a situation of company deadlock, an application is brought for an order under section 205 of the Act of 1963. In invoking that subsection, a petitioner does not always include an alternative petition to wind up the company but seeks instead under section 205 an exit from the company or the rectification of its affairs. If an application had been made in this case not to wind up the company but, instead, under section 205, or had been made instead under section 213(g) which activates the powers under section 205 once such a petition is presented, the court would unarguably have had open to it to a much wider range of options. These include section 205 orders: for one director to buy out the shares of another director at a price fixed by the court; for the reduction of the company's capital; for the alteration of the company's articles and memorandum; or for the reversal of a particular decision. It is argued on behalf of Paul Ward, the respondent to this petition, that once any petition is presented to the court that may have as its result that a company may be wound up, section 216 of the Act of 1963 provides of itself, and without any necessity to invoke the powers under section 205, a wide discretion as to the order to be made and that these must include the amplitude of powers that are open under section 205. It is strongly argued in reply on behalf of the petitioner Paul Anderson that since the application was made by him under section 213(f) that none of the powers under section 216 on winding up a company contemplate the incorporation of any of the kinds of order open under section 205 and, further, that the specific inclusion of those powers in a petition to wind up under section 213(g) means that they are to be excluded under s213(f). In other words, that on this application to wind up the company the Court has none of the section 205 options open to it, merely the power to wind up or to refuse to wind up the company. The scheme of interaction between the various options set out in the Companies Act would otherwise, it is contended on behalf of the petitioner Paul Anderson, make no sense.

4 I will set out the relevant legislative provisions before turning to my reasons why I hold in favour of arguments advanced on behalf of the respondent Paul Ward.

1963

5 Section 205 of the Act of 1963 provides petitioners who are members of a company with the potential for relief where the affairs of the company or the powers of the directors are being conducted or exercised oppressively or in disregard of their interests.

6 The relevant portion of section 205 is as follows:

7 (1) Any member of a company who complains that the affairs of the company are being conducted or that the powers of the directors of the company are being exercised in a manner oppressive to him or any of the members (including himself), or in disregard of his or their interests as members, may apply to the court for an order under this section.

8 (2) In a case falling within subsection (3) of section 170, the Minister may apply for an order under this section.

9 (3) If, on any application under subsection (1) or subsection (2) the court is of opinion that the company's affairs are being conducted or the directors' powers are being exercised as aforesaid, the court may, with a view to bringing to an end the matters complained of, make such order as it thinks fit, whether directing or prohibiting any act or cancelling or varying any transaction or for regulating the conduct of the company's affairs in future, or for the purchase of the shares of any members of the company by other members of the company or by the company and in the case of a purchase by the company, for the reduction accordingly of the company's capital, or otherwise.

10 (4) Where an order under this section makes any alteration in or addition to any company's memorandum or articles, then, notwithstanding anything in any other provision of this Act but subject to the provisions of the order, the company concerned shall not have power without the leave of the court to make any further alteration in or addition to the memorandum or articles inconsistent with the provisions of the order; but, subject to the foregoing provisions of this subsection, the alterations or additions made by the order shall be of the same effect as if duly made by resolution of the company, and the provisions of this Act shall apply to the memorandum or articles as so altered or added to accordingly.

…

11 (7) If, in the opinion of the court, the hearing of proceedings under this section would involve the disclosure of information the publication of which would be seriously prejudicial to the legitimate interests of the company, the court may order that the hearing of the proceedings or any part thereof shall be in camera.

12 Section 213, as amended, sets out the circumstances in which a company may be wound up by the court:

A company may be wound up by the court if-

13 (a) the company has by special resolution...