Re Hefferon Kearns Ltd (No. 1)

JurisdictionIreland
CourtHigh Court
Judgment Date01 January 1993
Docket Number[1990 No. 14426P]
Date01 January 1993

High Court

[1990 No. 14426P]
In re Hefferon Kearns Ltd. (No. 1)
In the matter of Hefferon Kearns Limited (under the protection of the Court) (No. 1) And in the matter of section 33 of the Companies (Amendment) Act, 1990. Thomas Hefferon, Michael Kearns, Cosmo Mellon, and Finbar O'Neill
Applicants
and
Dublin Heating Company Limited
Respondent

Cases mentioned in this report:—

Gardner v. Lucas (1878) 3 App. Cas. 582.

Hamilton v. Hamilton [1982] I.R. 466; [1982] I.L.R.M. 290.

O'H. v. O'H. [1991] I.L.R.M. 108.

Company - Reckless trading - Statute creating civil liability for reckless trading - Whether retrospective - Whether liability for reckless trading applicable to actions pre-dating creation of liability - Companies (Amendment) Act, 1990 (No. 27), s. 33.

Statute - Retrospectivity - Construction - Statute creating civil liability for reckless trading - Whether liability for reckless trading applicable to actions pre-dating creation of liability - Principles - Companies (Amendment) Act, 1990 (No. 27), s. 33 - Constitution of Ireland, 1937, Article 15, s. 5.

Company - Examiner - Company under protection of High Court - Statutory prohibition on proceedings during period of protection "against . . . person in respect of the debts of the company" - Proceedings against directors for reckless trading - Whether such proceedings might be instituted during period of protection - Companies (Amendment) Act, 1990 (No. 27), ss. 5, 33.

Motion on notice.

The facts are summarised in the headnote and are set out in the judgment of Murphy J., post.

During the continuance of an examination of Hefferon Kearns Ltd. being carried on pursuant to the Companies (Amendment) Act, 1990, the respondent sought, by way of motion on notice, returnable for hearing on the 14th January, 1991, declarations pursuant to s. 33 of the Act of 1990. Before that motion was heard, the High Court (Costello J.) directed a hearing of preliminary issues as to the construction of section 33.

The preliminary issues were heard by the High Court (Murphy J.) on the 20th February, 1991.

Article 15, s. 5 of the Constitution of Ireland, 1937, provides as follows:—

"The Oireachtas shall not declare acts to be infringements of the law which were not so at the date of their commission."

Section 5, sub-s. 1 of the Companies (Amendment) Act, 1990, provides that from the time of presentation of a petition for the appointment of an examiner to a company until the withdrawal or refusal of the petition, the company shall be deemed to be under the protection of the court.

Section 5, sub-s. 2 (a) to (e) of the Act prohibits any form of execution against the company or the assets thereof during the period it is under the protection of the court.

Section 5, sub-s. 2 (f) of the Act provides as follows:—

"Where, under any enactment, rule of law or otherwise, any person other than the company is liable to pay all or any part of the debts of the company (i) no attachment, sequestration, distress or execution shall be put into force against the property or effects of such person in respect of the debts of the company, and (ii) no proceedings of any sort may be commenced against such person in respect of the debts of the company."

Section 16 of the Act provides that the Examiner's report pursuant to s. 15 shall comprise inter alia: "(i) his opinion as to whether the facts disclosed would warrant further enquiries under sections 33 and 34."

Section 24 of the Act provides for consideration by the court of the Examiner's proposals for the company.

Section 33, sub-s. 1 (a) of the Act introduced a concept of civil liability of officers of a company in respect of the debts of the company, where that person, while an officer of the company, was knowingly a party to the carrying on of the business of the company, in a reckless manner.

Section 33, sub-s. 1 (a) of the Act provides as follows:—

"(1) If in the course of proceedings under this Act it appears that -

  • (a) any person was, while an officer of the company, knowingly a party to the carrying on of any business of the company in a reckless manner; or . . .

the court, on the application of the examiner, or any creditor or contributory of the company, may, if it thinks it proper to do so, declare that such person shall be personally responsible, without any limitation of liability, for all or any, part of the debts or other liabilities of the company as the court may direct."

Section 34 of the Act provides for criminal liability of persons for fraudulent trading of a company.

The Companies (Amendment) Act, 1990, was enacted on the 29th August, 1990. The scheme of the Act permits the appointment by the High Court of an examiner to a company and to empower the court to make such an order where it would be likely to facilitate the survival of the company.

A petition was presented by Hefferon Kearns Ltd. to the court on the 12th October, 1990, pursuant to the Act for the appointment of an examiner to the company, which was indebted to the respondent and unable to pay its debts as they fell due. A provisional appointment made on that date was confirmed by the High Court on the 22nd October, 1990.

Whilst the company was under the protection of the court the respondent issued a motion on notice on the 11th December, 1990, seeking declarations pursuant to s. 33 of the Act that:— (a) the applicants being officers of Hefferon Kearns Ltd. were knowingly party to the carrying on of the business of that company in a reckless manner; and (b) the applicants should be personally responsible without any limitation of liability for all of the debts of Hefferon Kearns Ltd.

Before the motion was heard the High Court (Costello J.) directed a hearing of the following preliminary issues:—

  • (1) Whether the liability created by s. 33, sub-s. 1 (a) of the Companies (Amendment) Act, 1990, was retrospective in its effect.

  • (2) Whether or not the respondent was precluded from bringing proceedings at this stage by virtue of s. 5 of the Companies (Amendment) Act, 1990.

  • (3) Whether the court had any jurisdiction to make an order under s. 33 of the Companies (Amendment) Act, 1990, while the company remained under the protection of the court where an application was made by a creditor of the company.

Held by Murphy J., in deciding on the preliminary issues, 1, that the liability created by s. 33, sub-s. 1 (a) of the Companies (Amendment) Act, 1990, was not retrospective.

2. That the common law presumed that an Act is prospective and not retrospective unless there was a clear and unequivocal intention of the legislature to the contrary and to declare that retrospectively innocent actions, such as conduct of the officers of the company prior to the 29th August, 1990, constituted an infringement of the law would amount to a breach of Article 15, s. 5 of the Constitution, and therefore the Oireachtas did not nor could not have intended to make the Act so operate. As the actions which would infringe s. 33 were necessarily past it did not follow that the State intended that the actions might be antecedent to the legislation as well as antecedent to the proceedings under the Act or the application to the court.

Hamilton v. Hamilton [1982] I.R. 466 applied. O'H. v. O'H. [1991] I.L.R.M. 108 considered.

3. That proceedings pursuant to s. 33 of the Act of 1990 may be brought during continuance of the protection of the court because to preclude such proceedings, by virtue of s. 5 of the Companies (Amendment) Act, 1990, would render s. 33 nugatory.

Cur. adv. vult.

Murphy J.

By an order made herein on the 12th February, 1991, Costello J. directed the trial of the following issues:—

"1. Whether the liability created by s. 33, sub-s. 1 (a) of the Companies (Amendment) Act, 1990, is retrospective in its effect.

2. Whether or not the...

To continue reading

Request your trial
23 cases
  • Jones v Gunn
    • Ireland
    • High Court
    • 14 February 1997
    ...COMPANIES ACT 1963 S251 DEBTORS (IRL) ACT 1872 COMPANIES ACT 1990 S251 COMPANIES ACT 1990 S251(1)(a) HEFFERON KEARNS LTD (NO 1), IN RE 1993 3 IR 177 COMPANIES (AMDT) ACT 1990 S33(1)(a) COMPANIES (AMDT) ACT 1990 S33 COMPANIES ACT 1990 S297A(1)(a) COMPANIES ACT 1990 S297A(1)(b) ALBA RADIO V ......
  • Re Hefferon Kearns Ltd (No. 2)
    • Ireland
    • High Court
    • 14 January 1993
    ...11 October, 1990, the day preceding the appointment of the examiner, constituted reckless trading. In re Hefferon Kearns Ltd. (No. 1)IR [1993] 3 I.R. 177, O'H. v. O'H.DLRM [1991] ILRM 108 and Hamilton v. HamiltonIR[1982] I.R. 466 applied. 3. That the plaintiff had not been sufficiently awar......
  • Margaret Mccallig v an Bord Pleanála and Others
    • Ireland
    • High Court
    • 5 June 2014
    ...UKHL 40 WRIGHT v HALE 158 ER 94 1860 6 HURL & N 227 30 LJ EX 40 HEFFERON KEARNS LTD, IN RE; HEFFERON & ORS v DUBLIN HEATING CO LTD (NO 1) 1993 3 IR 177 1992 ILRM 51 1991/8/1875 RSC O.99 RSC O.84 r20(1) RULES OF THE SUPERIOR COURTS (JUDICIAL REVIEW) 2011 SI 691/2011 RSC O.84 r22(1) DUBLIN CI......
  • Governors and Guardians of the Hospital for the Relief of Poor Lying-in Women, Dublin v Information Commissioner
    • Ireland
    • High Court
    • 2 July 2009
    ...ACT 1997 S28(2)(A) FREEDOM OF INFORMATION ACT 1997 S28(6) HAMILTON v HAMILTON 1982 IR 466 1982 ILRM 290 HEFFERON KEARNS LTD (NO 1), IN RE 1993 3 IR 177 1992 ILRM 51 1991/8/1875 CHESTVALE PROPERTIES LTD & HODDLE INVESTMENTS LTD v GLACKIN 1993 3 IR 35 1992 ILRM 221 1992/1/103 BENNION & GOODAL......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT