Re Hibernation Therapeutics Global Ltd ((in Liquidation))
| Jurisdiction | Ireland |
| Judge | Ms. Justice Finlay Geoghegan |
| Judgment Date | 24 January 2014 |
| Neutral Citation | [2014] IEHC 41 |
| Court | High Court |
| Date | 24 January 2014 |
[2014] IEHC 41
THE HIGH COURT
COMPANIES ACT 1963 S222
COMPANIES ACT 1963 S231
WRIGHT-MORRIS v IRISH BANK RESOLUTION CORP LTD (IN SPECIAL LIQUIDATION) UNREP LAFFOY 15.8.2013 2013 IEHC 385
IRISH BANK RESOLUTION CORPORATION ACT 2013 S6(2)(B)
MACCANN & ORS COMPANIES ACTS 1963-2012 2012
EXCHANGE SECURITIES & COMMODITIES LTD & ORS, IN RE 1983 BCLC 186
ARO CO LTD, IN RE 1980 CH 196 1980 2 WLR 453 1980 1 AER 1067
COMPANIES ACT 1948 S231 (UK)
MJBCH LTD (IN LIQUIDATION), IN RE UNREP FINLAY GEOGHEGAN 15.4.2013 2013 IEHC 256
BOYD v LEE GUINNESS LTD & ANOR 1963 NI 49
COMPANIES ACT 1963 S122
Company Law – Winding up - Official liquidator - Continuation of proceedings - Leave of the court - Fair and right - Issues that could be dealt with in the course of winding up - Shareholdings - Creditors - Counterclaim - Grant of application subject to conditions - Undertaking - Companies Act 1963
Facts: On the 22 nd April 2013, Hibernian Therapeutics Global Limited (the ‘Company’) was wound up by an order of the High Court and an Official Liquidator was appointed. At that time, the Company was a plaintiff in plenary proceedings that were pending, as well as being a defendant to a counterclaim made therein. The Official Liquidator subsequently obtained the leave of the Court to serve a notice of discontinuance on behalf of the Company as a plaintiff in those proceedings. The defendants in the plenary proceedings, who were also counterclaim plaintiffs, brought an application pursuant to s. 222 of the Companies Act 1963 (‘the 1963 Act’) for liberty to proceed with so much of the counterclaim that was necessary to obtain a declaration that they were the legal and/or beneficial owners of the shares held in the Company by Chelsea Worldwide Ltd. and/or Gibro Nominees Ltd and an order pursuant to s. 222 of the 1963 Act and/or the inherent jurisdiction of the Court requiring the Company to rectify its share register so as to reflect the legal and/or beneficial interest of the counterclaim plaintiffs in the shares held by Chelsea Worldwide Ltd. and/or Gibro Nominees Ltd.
It was clear that the shares in the Company were valueless because the sum that had been realised from the liquidation of company assets was only to be distributed amongst the creditors. Nevertheless, the counterclaim plaintiffs argued that there was a potential benefit to them in obtaining such relief because it could provide good grounds to resist a claim for damages being brought against the first and third counterclaim plaintiffs in the United States of America by a company called Triad Investments. The Official Liquidator objected to the application on the basis that the relief sought could potentially prevent the envisaged distribution to creditors and finalising of the winding up of the Company in a timely manner. It was also argued that it could possibly lead to added costs for the liquidation. It was noted out that because leave to serve a notice of discontinuance on behalf of the Company as a plaintiff in the plenary proceedings had been obtained by the Official Liquidator, it was unlikely he would seek leave to defend the relevant part of the counterclaim on behalf of the Company if the counterclaim plaintiffs” application was granted.
Held by Finlay Geoghegan J. that pursuant to s. 222 of the 1963 Act, the leave of the court was required to continue or commence proceedings against a company that had become subject to a winding up order or had a provisional liquidator appointed. It was also pointed out that in determining an application brought under s. 222 of the 1963 Act, the case of Wright-Morris v. Irish Bank Resolution Corporation Ltd. (In Special Liquidation) [2013] IEHC 385 made it clear that the Court should determine what was right and fair in the circumstances, but should refuse leave if the proposed action raised issues which could be conveniently decided in the course of the winding up. Applying these principles, it was held that the ownership of the shares in the Company was a complex issue, which could not be conveniently decided in the course of the winding up. The counterclaim plaintiffs had claimed there was a benefit to them in continuing with part of their counterclaim. More importantly, however, no application had been brought in the plenary proceedings seeking to strike out the counterclaim. In those circumstances, it was considered right and fair to grant the application of the counterclaim plaintiffs.
It was further held that s. 222 of the 1963 Act allowed the Court to grant leave to a party to continue proceedings against a company that was being wound up ‘subject to such terms as the court may impose’. Given the concerns that had been expressed by the Official Liquidator, it was considered fair and right to grant the counterclaim plaintiffs” application subject to the following terms: the counterclaim plaintiffs were prohibited from seeking any costs against the Company in relation to the counterclaim unless the Official Liquidator decided to bring a defence; the solicitors for the counterclaim plaintiffs were required to give an undertaking that the counterclaim plaintiffs would discharge the reasonable costs, remuneration and expenses of the Official Liquidator if such arose as a result of the grant of the s. 222 application; the leave to proceed with the relevant part of the counterclaim in the plenary proceedings was limited in time to the hearing of the Official Liquidator”s application for final orders in the winding up proceedings; and the application by the Official Liquidator for final orders was to be brought on notice to the counterclaim plaintiffs, with the counterclaim plaintiffs having liberty at that time to apply for leave to proceed with the relevant part of its counterclaim beyond that date.
Application granted.
1. Hibernation Therapeutics Global Ltd. (In Liquidation) ("the Company") was wound up by order of the High Court made on 22 nd April, 2013, and Mr. Michael McAteer was appointed Official Liquidator thereof. At the date of the making of the winding up order, there were plenary proceedings [2012 No. 3760P] ("the plenary proceedings") pending before the High Court in the Commercial List. The Company had been added as a plaintiff to the plenary proceedings and is a defendant to a counterclaim made therein.
2. This application is brought pursuant to s. 222 of the Companies Act 1963, by Mr. Hugh Franklin Smisson III ("Mr. Smisson"), who is both a defendant and a counterclaim plaintiff in the plenary proceedings, on his own behalf and on behalf of the other two counterclaim plaintiffs, namely, Trimax Medical Management Inc. and Chelsea Worldwide LLC(all three will be referred to as "the counterclaim plaintiffs"). The application is brought on notice to the Official Liquidator.
3. The background facts to the plenary proceedings and the present application are set out in two affidavits of Mr. Smisson and one of the Official Liquidator. Insofar as I refer to facts in this judgment, I am not making any finding of fact, but merely referring to the facts as stated in the affidavits and assumed to be true for the purposes of this application. It is not intended, by any reference to facts in this judgment, to affect the ability of any party to litigate and dispute such facts in the plenary proceedings. The Company appears to have been established as a joint venture entity for the purpose of holding and controlling intellectual property relating to the combined usage of several FDA approved drugs. The only valuable asset held by the...
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