Re Lance Homes Ltd & The Companies Act; Lee Towers Management Company Ltd v Lance Investments Ltd ((in Liquidation))

JurisdictionIreland
JudgeMs. Justice Baker
Judgment Date19 July 2018
Neutral Citation[2018] IEHC 444
CourtHigh Court
Docket Number[2010 No. 196 COS & 2017 No. 245 CA],[2017 No. 245 CA]
Date19 July 2018

IN THE MATTER OF THE COMPANIES ACT, 2014

AND

IN THE MATTER OF LANCE INVESTMENTS LIMITED (IN LIQUIDATION) AND LANCE HOMES LIMITED (IN LIQUIDATION)

AND

IN THE MATTER OF AN APPLICATION OF CARL DILLON (LIQUIDATOR)

THE HIGH COURT ON CIRCUIT

IN THE MATTER OF THE MULTI UNIT DEVELOPMENT ACT, 2011

AND

IN THE MATTER OF THE COMPANIES ACT, 2014

BETWEEN/
LEE TOWERS MANAGEMENT COMPANY LIMITED
PLAINTIFF
AND
LANCE INVESTMENTS LIMITED (IN LIQUIDATION),
LANCE HOMES LIMITED (IN LIQUIDATION),

AND

IRISH IMMIGRATION FUND LIMITED
DEFENDANTS

[2018] IEHC 444

Baker J.

[2017 No. 245 CA]

[2010 No. 196 COS]

THE HIGH COURT

Liquidation – Mareva injunction – Multi-Unit Development Act 2011 – Liquidator seeking determination of the High Court – Whether the Multi-Unit Development Act 2011 has retrospective effect

Facts: Mr Dillon, the official liquidator of Lance Investments Ltd and Lance Holmes Ltd (the Companies) applied to the High Court pursuant to s. 631 of the Companies Act 2014, and by way of an appeal from an interim Mareva injunction made by the Circuit Court against the Companies and the liquidator given on 26 July 2017. The questions in respect of which the determination of the High Court was sought were as follows: 1) Does the Multi-Unit Development Act 2011 (the MUD Act) have retrospective effect and, if so, does it operate to impose an obligation on a liquidator to ensure completion of a development partially completed by the Companies prior to their liquidation? 2) Are the obligations of the Companies to complete the development under the MUD Act otherwise specifically enforceable or do they sound only in damages? 3) Do the mandatory orders granted by the Cork Circuit Court operate to displace the statutory scheme of priority of payments set out in s. 621 of the Companies Act? 4) Does the order for costs granted by the Circuit Court fall to be treated as a "cost, charge and expense" in the liquidation of the Companies within the meaning of s. 617 of the Companies Act, notwithstanding that the liquidator did not defend or otherwise cause the Companies to participate in the said proceedings? 5) Were the applications for a Mareva injunction and for attachment and committal permissible or appropriate in the light of the High Court order of 17 November 2014?

Held by Baker J that the first three questions raised must be answered as follows: 1) the MUD Act has retrospective effect to some extent in that it creates a statutory means of enforcing existing obligations and rights and it does not of itself impose an obligation on the liquidator to take positive steps to carry out works of construction and development; 2) the obligations to complete a development in accordance with planning permission and under the Building Regulations is enforceable as a matter of statute by virtue of s. 24 of the MUD Act, but like any action in specific performance it may be one which is enforceable only as a claim in damages; 3) the mandatory orders granted by the Circuit Court do not displace the statutory scheme of priority set out in s. 621 of the Companies Act.

Baker J held that she would answer the last two questions raised as follows: 4) the order for costs made by the Circuit Court is not to be treated as a cost, charge, and expense in the liquidation within the meaning of s. 617 of the Companies Act, save with respect to that part of the costs as may reasonably be ascertained to be attributable to the costs of prosecuting the claim for specific performance of the Management Company Agreement for the transfer of the common areas and the reversions; 5) the application for a Mareva injunction and the application for attachment and committal were not an appropriate means by which the Circuit Court order was to be enforced.

Injunction vacated.

JUDGMENT of Ms. Justice Baker delivered on the 19th day of July, 2018
1

This application comes before me on the motion of Carl Dillon, the official liquidator of Lance Investments Ltd. and Lance Holmes Ltd. ('the Companies') pursuant to s. 631 of the Companies Act 2014 ('the Companies Act'), and by way of an appeal from an interim Mareva injunction made by the Circuit Court against the Companies and the liquidator given on 26 July 2017.

2

The Companies were property developers and were responsible for the development of a residential apartment complex called 'Lee Towers', part of the River Towers complex on the grounds of the former Our Lady's Psychiatric Hospital, situated on the northern side of Lee Road, in the City of Cork. The development scheme agreements were executed on or about 1 January 2001.

3

The Companies were wound up by order of the High Court on 17 May 2010 on foot of a petition of the Revenue Commissioners presented on 29 March 2010 at the date of which Revenue claimed to be owed approximately €1.8 million.

4

The Companies are grossly insolvent and the liquidator estimates liabilities of approximately €5.8 million, of which approximately €1.8 million are to be treated as preferential.

5

It is anticipated that realisations already made, or assets not yet sold, may cover the costs and expenses of the liquidation and provide a small dividend to some preferential creditors. Very valuable assets of the Companies were subject to debentures, and the debenture holder having appointed a receiver has realised these assets. Unsecured creditors are not likely to receive any dividend.

6

The questions for determination arise out of Circuit Court proceedings authorised by Barrett J. on 17 November 2014 and brought pursuant to, inter alia, the provisions of the Multi-Unit Development Act 2011 ('the MUD Act') by Lee Towers Management Company Ltd. ('Lee Towers'), the owners" management company of the relevant parts of the development.

The Circuit Court orders
7

The Circuit Court proceedings were commenced by civil bill bearing record No. 2015/806 in the Cork Circuit Court against the Companies and another company, Irish Immigration Fund Ltd. ('IIF'), which was represented as notice party to the within application, and which had purchased phases 1 and 2 of the development from the liquidator.

8

The Circuit Court proceedings sought mandatory orders directing the Companies and IIF to transfer to Lee Towers the common areas and the reversions on the purchase leases in the relevant part of the development and an order that the Companies complete the development in accordance with the development agreement of 1 January 2001.

9

Orders were made by Judge O'Brien against all of the defendants on 5 July 2017 and the nature of the orders and the extent and enforceability of those against the Companies are the primary issues for determination in this judgment.

10

In summary, Judge O'Brien directed the transfer of the common areas and reversions to Lee Towers and made what was described as orders of ' mandamus', but more properly described as mandatory orders, directing that the Companies and IIF would complete the development in accordance with the development agreement of 1 January 2001, and comply with their respective obligations pursuant to the Planning and Development Act 2000, as amended ('the PDA') and/or the Building Control Act 1990, as amended ('the Building Control Act') to the satisfaction of the consulting engineer of the plaintiff. For convenience, I will refer to these orders as 'remedial orders'.

11

The works that were directed to be carried out to the common areas broadly speaking included works to the internal and external walls to deal with Fire Officer requirements, fire separation generally, and works to remediate defects in the roof, escape stairwell, lobbies, and other internal common areas.

12

Judge O'Brien also made an order directing the Companies (but not IIF) to reimburse to the plaintiff the costs already incurred in carrying out repairs and maintenance to the common areas.

13

Finally, the costs of the proceedings were granted to Lee Towers against the Companies and IIF, to be taxed in default of agreement. It is accepted for the purposes of present hearing that the costs order is joint and several.

14

Following on the order made by Judge O'Brien on 5 July 2017, Lee Towers obtained a Mareva injunction from the Circuit Court and later sought to attach and commit the Companies and Mr. Dillon personally and to sequester the assets of the Companies on the asserted ground that the Companies had wilfully disobeyed the order of Judge O'Brien.

15

When the application for committal and sequestration came before Judge O'Brien in the Circuit Court, he considered that the issues relating to the enforcement of his primary order ought to await consideration by the High Court of the questions raised in the application before me.

The directions sought
16

The reformulated questions in respect of which the determination of the High Court is sought are as follows:

1) does the MUD Act have retrospective effect and, if so, does it operate to impose an obligation on a liquidator to ensure completion of a development partially completed by the Companies prior to their liquidation?

2) are the obligations of the Companies to complete the development under the MUD Act otherwise specifically enforceable or do they sound only in damages?

3) do the mandatory orders granted by the Cork Circuit Court operate to displace the statutory scheme of priority of payments set out in s. 621 of the Companies Act?

4) does the order for costs granted by the Circuit Court fall to be treated as a 'cost, charge and expense' in the liquidation of the Companies within the meaning of s. 617 of the Companies Act, notwithstanding that the liquidator did not defend or otherwise cause the Companies to participate in the said proceedings?

5) were the application for a Mareva injunction and for attachment and committal permissible or appropriate in the light of the High Court order of 17 November 2014?

General propositions to be addressed
17

In very broad...

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