Re Hibernian Transport Companies Ltd

• Jurisdiction: Ireland
• Judgment Date: 01 January 1984
• Date: 01 January 1984
• Court: High Court

(H.C.)

In re Hibernian Transport Companies Ltd

Liability to tax -Whether deposit interest earned by money in the hands of the liquidator liable to tax - Whether tax payable a "necessary disbursement" - Whether tax payable ranks as a preferential payment or an unsecured debt - Companies Act, 1963 (No. 33), ss. 244, 285 - Finance Act, 1983 (No. 15), s. 56 - Winding Up Rules 1966, r. 129.

The liquidator of three companies which had been wound up thirteen years previously raised certain questions by motion concerning how the admitted liability of the companies to pay income tax, corporation profits tax and cororation tax on deposit interest accrued on monies held by the liquidator since the winding up was to be discharged: (1) Whether the tax payable in respect of the deposit interest was a necessary disbursement of the liquidator under the third heading of rule 129 (1) of the Winding Up Rules, 1966; (2) If the tax were found to be payable but not under rule 129, whether the tax payable would rank as a preferential payment under s. 285 of the Companies Act, 1963; (3) Whether the tax if payable but not under either of the above provisions would rank as an unsecured debt in the winding up of the companies. Rule 129 made provision for the priority of certain payments in the winding up of an insolvent company, and the third heading gave priority to "necessary disbursements" of the official liquidator "other than expenses properly incurred in preserving, realising or getting in the assets hereinbefore provided." It was submitted on behalf of the liquidator that those provisions of rule 129 had no application to this case following the interpretation of the rule in Revenue Commissioners v. DonnellyDLRM [1983] ILRM 329. On behalf of the Revenue it was contended that under the combined effect of the obligation to pay tax provided in the Corporation Tax Act, 1976, and the provisions of s. 244 of the Companies Act, 1963, whereby the court could make an order for payments out of the assets of an insolvent company of the costs...