Re Hibernian Transport Companies Ltd; Shell International Petroleum v Gordon (No. 1)

• Jurisdiction: Ireland
• Judgment Date: 01 January 1991
• Date: 01 January 1991
• Court: High Court

High Court

In re Hibernian Transport Companies Ltd.

In re Hibernian Transport Companies Ltd. (in liquidation): Shell International Petroleum Company Ltd., Plaintiff in issue

and

John M. Gordon and Peter Markham, Defendants in issue, and Owen H. Murphy, (Official Liquidator), Notice Party [1970 No. 3853P.]

Cases mentioned in this report:—

Re Fine Industrial Commodities Ltd.[1956] Ch. 256; [1955] 3 W.L.R. 940; [1955] 3 All E.R. 707.

In re Humber Ironworks and Shipbuilding Company (1869) L.R. 4 Ch. 643.

In re Lines Bros. Ltd.[1982] 2 W.L.R. 1010; [1982] 2 All E.R. 183; [1984] B.C.L.C. 215.

In re Lines Bros. Ltd. (No. 2)[1984] Ch. 438; [1984] 2 W.L.R. 905; [1984] B.C.L.C. 227.

In re Oldham Trademen's Insurance Company Ltd. (Unreported, High Court (England) Vinelott J., 19th December, 1980).

Re Rolls Royce Ltd.[1974] 1 W.L.R. 1584; [1974] 3 All E.R. 646.

Company - Winding up - Interest on debts - Liquidation lasting over 19 years - Surplus arising from deposit interest - Whether creditors entitled to interest on their debts in priority to shareholders claim to residue - Rate at which interest payable - Whether company insolvent - Companies Act, 1963, (No. 33) s. 284 - Bankruptcy Act, 1988, (No. 27) s. 86.

Notice of Motion.

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

On the 19th November, 1970, a petition for the winding up of Hibernian Transport Companies Ltd. was presented to the High Court, which, on the 7th December, 1970, ordered its winding up. By notice of motion dated the 30th March, 1987, the official liquidator applied pursuant to the provisions of s. 280 of the Companies Act, 1963, for the following direction:—

"1. A determination as to whether the creditors of the above named company or any one or more classes of creditors are entitled to the paid interest on the amount of their debts as ascertained at the commencement of the winding up and, if so, the period over which and the rate at which such interest should be paid, in circumstances where the assets realised in the winding up have proved more than sufficient to discharge the debts of the above named company as ascertained at the commencement of the winding up and all costs, fees and expenses of the liquidator."

On the 6th April, 1987, the High Court (Hamilton P.) ordered that the above question be determined and that Shell International Ltd. be appointed plaintiffs on the issue as representatives of the unsecured creditors and that John M. Gordon and Peter Markham be appointed defendants on the issue as representatives of the shareholders. The official liquidator was a notice party to the application.

The issue was tried before the High Court (Carroll J.) on the 31st January, 1989 and 1st February, 1989.

Section 284 of the Companies Act, 1963, provides, inter alia, that in the winding up of an insolvent company the same rules apply as are in force under the law of bankruptcy for the estates of persons adjudged bankrupt.

Section 86, sub-s. 1 of the Bankruptcy Act, 1988, provides:—

"1. If the estate of any bankrupt is sufficient to pay one pound in the pound with interest at the rate currently payable on judgment debts, and to leave a surplus the court shall order such surplus to be paid or delivered to or vested in the bankrupt, his personal representatives or assigns."

H. Ltd. (the company) went into liquidation in December, 1970. During the course of the liquidation monies realised from the sale of its assets were held on deposit earning interest. As a result of the interest earned the funds in the possession of the official liquidator were more than sufficient to discharge all the debts of the company ascertained at the commencement of the winding up together with the creditors' claims for interest and the costs of the liquidation.

The secured creditors had been repaid with interest. The unsecured creditors comprised those with a contractual claim to interest on their debts and all other unsecured creditors.

The official liquidator brought an application to court to determine whether the unsecured creditors of the company were entitled to interest on their debts as ascertained in priority to the shareholders' claim to the residue.

Held by Carroll J., in holding that the unsecured creditors were entitled to be paid interest on their debts as ascertained, 1, that the existence of a surplus in a liquidation of a company through interest earned on monies held on deposit did not mean that the company was solvent at the date of the commencement of the winding up.

In re Fine Industrial Commodities Ltd.[1956] Ch. 256; In re Lines Bros. Ltd.[1982] 2 W.L.R. 1010distinguished.

2. That as the company was insolvent at the date of the commencement of the winding up, under the provisions of s. 284 of the Companies Act, 1963, the rules of bankruptcy applied and accordingly the unsecured creditors were entitled to interest on their debts as ascertained, payable at the rate from time to time payable on judgment debts.

3. That those creditors entitled to contractual interest were entitled to be paid the balance of the sum due for contractual interest giving credit for the amount received in respect of statutory interest.

In re Humber Ironworks & Shipbuilding Company(1869) L.R. 4 Ch. 643 applied.

Cur. adv. vult.

Carroll J.

Hibernian Transport Companies Ltd. ("the Company") went into liquidation on...