Re Millstream Recycling Ltd

JurisdictionIreland
CourtHigh Court
JudgeMr. Justice Charleton,Miss Justice Laffoy
Judgment Date09 March 2010
Neutral Citation[2010] IEHC 55,[2009] IEHC 571
Docket Number[2009 No. 684 COS]
Date09 March 2010
Millstream Recycling Ltd, In re
IN THE MATTER OF MILLSTREAM RECYCLING LIMITED AND IN THE MATTER OF THE COMPANIES ACTS 1963 TO 2009

AND

IN THE MATTER OF AN APPLICATION BY MILLSTREAM RECYCLING LIMITED PURSUANT TO SECTION 201 OF THE COMPANIES ACT 1963 MILLSTREAM RECYCLING LIMITED
APPLICANT

[2009] IEHC 571

[No. 684COS/2009]

THE HIGH COURT

Abstract:

Practice & Procedure - Discovery - Third party discovery - Animal feed - Manufacturing plant - Security for costs - Multiple claims - Criminal Justice (Mutual Assistance) Act 2008 - Whether claim would be dismissed, whether security for costs appropriate and whether third party discover was possible

Facts: The plaintiff owned an animal feed manufacturing plant that made food whichhad become contaminated. Two claims for third party discovery were being made against the Garda Commissioner, namely the forensic and testing results of the composition of oil of each relevant location and a statement as to the source of the oil. The plaintiff sought inter alia third party discovery against the Garda Commission of papers related to the criminal investigation into the affair, to join another party and the defendant sought to dismiss the case against him and sought security for costs from the plaintiff. The plaintiff had multiple creditors arising from the food contamination scandal, which was growing and a scheme of arrangement pursuant to s. 201 Companies Act 1963 was proposed. The issue arose as to what had contaminated the oil ingredient of the pig feed and what the relationship was between the plaintiff and the third party. The defendant claimed that he was no longer contractually liable to the plaintiff and that his personality was subsumed into that of the corporate entity through which he traded.

Held by Chalrleton J. that the litigation had to proceed. The determination of the facts behind the scandal transcended the individual claims and counterclaims of the parties. There was a strong argument that the plaintiff had an actionable wrong against the defendant in contract and in tort and that there was a causal connection between that actionable wrong ad the inability of the plaintiff to meet the costs of the defendant. The Garda Commissioner should not be asked to hand over statements taken from persons in Northern Ireland or in Ireland as to the source of the oil. The forensic results as to the nature of what was found were neutral facts. The inspection of these was not such as to hinder the Garda investigation. The should be disclosed with, the exception of those obtained under the Criminal Justice (Mutual Assistance) Act 2008. The Court could not determine the motion to dismiss on the basis of inadequate material before it then.

Reporter: E.F.

COMPANIES ACT 1963 S201(1)

CIVIL LIABILITY ACT 1961 S62

COMPANIES ACT 1963 S201

COMPANIES ACT 1963 S201(2)

COMPANIES ACT 1963 S201(3)

COMPANIES ACT 1985 S425 (UK)

HAWK INSURANCE CO LTD, IN RE 2002 BCC 300 2001 2 BCLC 480

PYE (IRL) LTD, IN RE UNREP COSTELLO 11.3.1985 1985/3/652

PALMER & SCHMITTHOFF PALMERS COMPANY LAW 23ED 1982

PRACTICE STATEMENT (COMPANIES: SCHEMES OF ARRANGEMENT) 2002 3 AER 96 2002 1 WLR 1345 2002 BCC 355

T & N LTD & ORS (NO 3), IN RE 2007 1 AER 851 2007 1 BCLC 563 2007 BUS LR 1411

RSC O.75 r5(X)

RSC O.75 r21

RSC O.75 r5

RSC O.75 r22

RSC O.75 r23

RSC O.74 r135(1)

COMPANIES ACT 1963 S202(1)(A)

COMPANIES ACT 1963 S202

JOHN POWER & SON LTD, IN RE 1934 IR 412

COMPANIES ACT 1963 S222

COX v BANKSIDE MEMBERS AGENCY LTD 1995 2 LLOYDS 437 1995 CLC 671

THIRD PARTIES (RIGHTS AGAINST INSURERS) ACT 1930

SOVEREIGN LIFE ASSURANCE CO (IN LIQUIDATION) v DODD 1892 2 QB 573

OSIRIS INSURANCE LTD, IN RE 1999 1 BCLC 182

COLONIA INSURANCE (IRL) LTD 2005 1 IR 497 2005/11/2388 2005 IEHC 115

COMPANIES ACT 1963 S202(4)

PAN ATLANTIC INSURANCE CO LTD, IN RE 2003 BCC 847 2003 2 BCLC 678

EUROPEAN CONVENTION ON HUMAN RIGHTS & FUNDAMENTAL FREEDOMS ART 6

1

Miss Justice Laffoy delivered on the 23rd day of December, 2009.

The application
2

This is an application by Millstream Recycling Limited (the company) for an order pursuant to s. 201(1) of the Companies Act 1963 (the Act of 1963) and for further directions. Before outlining the specific reliefs sought on the application, I consider it appropriate to outline the history of the application briefly.

3

This matter first came before the Court on Tuesday, 3 rd November, 2009, on an ex parte application on which the company sought directions as to the proceedings to be taken on foot of the original originating notice of motion, which had been issued on 2 nd November, 2009 and which was returnable before the Court on 16 th November, 2009. On that occasion, the Court (Murphy J.) made orders that -

4

(a) the notice of motion and grounding documents be served on the parties set out in Appendix V to the notice of motion (being creditors) insofar as their addresses were known or could reasonably be obtained,

5

(b) that the notice of motion be advertised in certain publications, namely, the Irish Independent, the Farmers Journal, the Financial Times, the Belfast Telegraph and Iris Oifigiúil, and

6

(c) that until Monday 16 th November, 2009 all proceedings instituted against the company be stayed and that the institution of further proceedings against the company be restrained.

7

When the matter came before the Court on the return date, 16 th November, 2009, counsel for the company sought an adjournment for one week to consider affidavits which had been filed by creditors of the company. On 23 rd November, 2009 the Court (Laffoy J.) acceded to an application by the company for a further adjournment and adjourned the matter for two weeks. The stay on proceedings was continued subject to the condition that any existing litigant in the Commercial Court should be at liberty to prosecute any motion before that Court and should be at liberty to comply with any existing directions given by that Court. It was further directed that any revision of the scheme referred to in the notice of motion was to be furnished to the creditors referred to in the order of 3 rd November, 2009 together with any supporting affidavit by close of business on 2 nd December, 2009. A revised scheme was in fact before the Court when the matter came on for hearing on 8 th December, 2009 and the company sought leave to amend the originating notice of motion.

8

As I have stated, the relief now sought by the applicant is an order pursuant to s. 201(1) of the Act of 1963, specifically directing the summoning of a meeting of the creditors of the company who have made claims against the company arising out of the contamination of food products manufactured by the company (the contamination creditors) to be held on 1 st July, 2010 to consider, and if thought appropriate, to approve (with or without modification) a scheme of arrangement the subject of the application. I will refer to this as the primary direction. Additionally, the company seeks directions, which I will refer to as ancillary directions, as to the notification and holding of the creditors' meeting including:

9

(i) that Mr. Jim Luby, of McStay Luby, Chartered Accountants, or a named substitute, be appointed as chairman of the meeting,

10

(ii) that Mr. John McGee, a loss adjustor, of OSG Outsource Services Group Ltd., (the Expert) be appointed "as Expert" and that Ronan Dolan, Senior Counsel, be appointed as legal assistant in order to assess the claims made by the contamination creditors,

11

(iii) that the decision of Mr. McGee be final and binding on all contamination creditors who have made a claim against the company for the purposes of valuing the claim under the scheme, and

12

(iv) various other directions as to advertising for claims, furnishing information to claimants, the prescribed form of claim, the timeframe within which the Expert could request information and when it should be supplied and the timeframe within which the Expert should determine the value of the claims of the contamination creditors for voting and dividend purposes (14 th May, 2010),

13

(v) that at the creditors' meeting that the voting be determined by the value of the claim of each contamination creditors and that the votes might be given personally or by proxy, with details of when proxies were to be received and the form of the proxy and

14

(vi) that the entitlement to attend and vote at the meeting or any adjournment thereof should be determined by reference to the value of each of the contamination creditors' claims as assessed by the Expert.

15

Apart from variations in the timeframe, the principal change sought by the company in relation to the ancillary directions relates to the identity of the Expert, the Expert originally nominated by the company having been objected to by some of the creditors.

16

Further relief is now sought, which had not been originally sought, namely, an order for specified directions in relation to the construction of the meaning of the policy of insurance which is at the heart of the scheme, which I will refer to as the construction proceedings directions, namely that -

17

(a) the contamination creditors or one of them, shall have two weeks to notify the company's solicitors in writing of their wish to have the High Court determine the interpretation of the policy, setting out the facts upon which they say the policy has been wrongly interpreted by FBD Insurance Plc. (FBD), the insurer,

18

(b) the company shall "within seven days of such written notification (if any)" issue a Special Summons (or such other proceedings as they be deemed necessary) with FBD named as respendent, and the said notifying party, or parties, named as third party or parties and being the effective moving party, and

19

(c) that the company shall seek directions from the Court...

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