Re Murph's Restaurants Ltd

• Jurisdiction: Ireland
• Judge: Gannon J.,McWilliam J.
• Judgment Date: 31 July 1979
• Neutral Citation: [1979] IEHC 1
• Court: High Court
• Docket Number: No. 1174f/1979,No. 1174P./1979
• Date: 31 July 1979

MURPH'S RESTAURANTS LTD, IN RE

IN THE MATTER OF

MURPH'S RESTAURANTS LIMITED.

AND IN THE MATTER OF THE COMPANIES ACT, 1963

[1979] IEHC 1

No. 1174f/1979

THE HIGH COURT

1 Judgment of McWilliam J.delivered the 5th day of April 1979

2 These proceedings have been initiated by the Petitioner to wind upMurph's Restaurants Limited (hereinafter called the Company). At thetime of the filing of the petition, my copy of which does not bear anydate, the Petitioner appears to have been a director of the Company. Hehad been served with a notice calling an extraordinary general meeting of the Company on 12th March, 1979, for the purpose of considering aresolution that the Petitioner be removed from office as a director of the Company. There were three directors and the Petitioner has objectedthat he was not given any notice of the meeting of the Board at which it was decided to convene the extraordinary general meeting. It is unlikelythat this is very material, even if correct. It appears that the meetingcalled for 12th March did not take place and it may be assumed that thePetitioner is still a director. It is admitted that the Petitioner hasbeen refused any participation in theaffairs of the Company as a director and he also alleges that the other directors are attempting to purchase his shares at a gross undervalue.The three directors are the only shareholders in the Company and theyhave equal shareholding. In correspondence prior to the issue of thePetition it was stated on behalf of the Petitioner that the petition forwinding up was being filed pursuant to the provisions of section 213 (g)of the Act.

3 The present motion is brought on behalf of the Company for an Orderrestraining the Petitioner from advertising the petition.

4 Section 213 of the Act provides that;-

"A Company may be wound up by the Court if -

(f) the court is of opinion that it is just and equitable that the company be wound up;

(g) the court is satisfied that the companys' affairs are beingconducted, or the powers of the directors are being exercised, in amanner oppressive to any member pr in disregard of his interests as amember and that, despite the existence of an alternative remedy,windingup would be justified in the general circumstances of the case so,however, that the court may dismiss a petition to wind up under thisparagraph if it is of opinion that proceedings under section 205 would,in all the circumstances, be more appropriate."

5 Section 215 provides as follows:- "An application for the windingup of a company shall be by petition presented, subject to theprovisions of this section, either by the company or by any creditor orcreditors (including contingent or prospective creditors), contributoryor contributories, or by all or any of these parties, together orseparately, so, however, that - (e) a petition for winding up on thegrounds mentioned in paragraph (g) of section 213 may be presented byany person entitled to bring proceedings for an Order under section205."

6 Section 205 provides, at subsection (l), as follows:-"Any memberof a company who complains that the affairs of the company are beingconducted or that the powers of the directors of the company are being exercised in a manner oppressive to him or any of the members (includinghimself),or in disregard of his or their interests as members, may apply to thecourt for an order under this section." The section then makesprovision for remedies other than winding up.

7 It has been urged on behalf of the Company that the advertisement of thepetition would greatly damage the Company, that the matters complainedof by the Petitioner are such as could properly be dealt with under theprovisions of section 205, that the petition is not presented in goodfaith, and that it is a case in which the Court would, under theprovisions of paragraph (g) of section 213, dismiss a petition to windup on the grounds that proceedings under section 205 would be moreappropriate. I was referred to the case entitled In Re A Company(1894) 2 Ch. 394 as authority for the proposition that I havejurisdiction to restrain the advertisement of the petition if it is notpresented in good faith but for the purpose of putting pressure on thecompany.

8 For the Petitioner it is argued that his co-directors are trying toacquire his shares on unfavourable terms and that, if any of the matterscomplained of could be a ground forwinding up, this application should be refused. I was referred to thecase of Bryanston Finance Ltd. -v- de Vries (1976)1 All E.R.25. I was also referred to the case of Mann -v- Goldstein (1968)All E.R. 769 in support of the proposition that pursuing a validclaim in a normal manner is not an abuse of the process of the courteven though it is done with personal hostility and with some ulteriormotive.

9 It occurs to me that some confusion may have been caused in the minds ofboth parties by the reference in the correspondence to paragraph (g) ofsection 213. This paragraph and section 205 apply only to members of a company as members. Apart from the allegations in paragraph 13 of thepetition, which are not grounded on any facts, the petition is based onfacts which prejudice the Petitioner in his capacity as director.Although there has been an offer to purchase the Petitioners shares,this did not arise until the Petitioner had threatened to issue hispetition to have the company wound up on the ground that he was beingdeprived of his rights as a director and there does not appear to have been a threat of any sort to the Petitioner's shareholdingorto his rights as a member.

10 On the other aspect of the case, it is perfectly clear that thedirectors are at loggerheads and that the Petitioner has been deprivedof all his functions as director. This appears to be a case, similar tothat of Re Lundi Brothers Ltd. (1965) I W.L.R. 1051, in which,in substance, a partnership exists between the three persons carrying on the business of the company together and that, prima facie, thePetitioner would have been entitled to a dissolution of the partnershipif it were a partnership and not a company, and that, accordingly, hehas a bona fide claim to have the Company wound up.

11 On the views I have taken that the petition is based on the Petitioner'soffice of director and a3 to the application of section 205 andparagraph (g) of section 213, it does not appear to me to be open to the Court to dismiss the petition on the grounds that proceedings undersection 205 would be more appropriate.

12 Under these circumstances, I will refuse the application to restrain thePetitioner from advertising the petition,although it may well be that the Petitioner should consider whether itis to his advantage to proceed with his petition or not.

13 I should add that I would be hesitant to restrain the advertisement of apetition if the circumstances were not such that I should also restrainany further proceedings on the petition, as was done in the Case of In Re A Company

MURPH'S RESTAURANTS LTD, IN RE

IN THE MATTER OF MURPH'S RESTAURANTS LIMITED AND THE COMPANIES ACT 1963

PETITION OF BRIAN E. SUITER

1978 WJSC-HC 3494

No. 1174P./1979

THE HIGH COURT

1 Judgment of Gannon J. delivered on the 31st July 1979

2 Murph's Restaurants Ltd. is a private company which was incorporated on the 17th January, 1972 with a share capital of 3,000 ordinary shares of £1 each of which 2,400 are fully paid up. There are only three shareholders namely Brian Suiter, Kevin O'Driscoll and G. Murph O'Driacoll who are also directors of the company. The present value of the assets of the company is estimated by the company's accountant to be little short of £190,000. Brain Suiter has petitioned the Court pursuant to section 213 of the Companies Act, 1963to order that the company be wound up on the grounds that the affairs of the company are being conducted and the powers of the directors being exercised in a manner which is oppressive to him and in disregard of his interests and also that it is just and equitable so to order. The company on the hearing of this petition is represented by the other two shareholders/directors Kevin and Murph O'Drincoll, who on their part claim that the petitioner has been removed from the position of director for good reason and that it would be neither in the interests of the company nor just nor equitable to wind up the company. Each of the three shareholders/directors, to whom I shall refer hereafter as Brian, Kevin and Murph, and the company's accountant gave evidence on the hearing of the petition which was amended by consent to include a claim by Brain, the petitioner, for alternative relief under section 205 of the 1963 Act.

3 Prior to the formation of the company Brian worked as a computer salesman in IBM Ltd. in which Kevin also was employed and they were close friends. They discussed the idea of setting up as a joint venture as snack bar business and engaging Kevin' brother Murph, who was then not in any employment, to manage the business. After three or four months discussion this company was incorporated following agreement that Brian and Kevin would advance £800 each as capital and that each would advance a further £400 on behalf of Murph so that all three would be equal partners. It was agreed that Murph would not be required to refund these two advances made on his behalf but would given equivalent value in his whole time attention to the business while Kevin and Brian remained in their salaried employments. Within three years Kevin also became whole-time engaged in the work of the company, but Brian retained his employment having moved from IRK Ltd. to Honeywell Ltd. and then to Memory Ireland Ltd. with whom he was general manager at a salary of about £10,000 per annum from 1976 until he too became whole-time engaged in the company in June, 1977. Up to that time neither Kevin nor Murph was in receipt of an annual income as high as that which Brian was...