Re Noyek (A.) Sons Ltd; Burns v Hearne

• Jurisdiction: Ireland
• Judge: GRIFFIN J.
• Judgment Date: 25 July 1988
• Neutral Citation: 1988 WJSC-SC 933
• Court: Supreme Court
• Docket Number: [1985 No. 961 Sp.],(205/86)
• Date: 25 July 1988

1988 WJSC-SC 933

THE SUPREME COURT

Finlay C.J.

Henchy J.

Griffin J.

(205/86)

BURNS v. HEARNE

IN THE MATTER OF

A NOYEK & SONS LIMITED (IN

VOLUNTARY LIQUIDATION)

BETWEEN/

ALEX BURNS

Applicant/

Appellant

and

EDWARD N. HEARNE

Respondent

Citations:

COMPANIES ACT 1963 S256

COMPANIES ACT 1963 S281

WINDING UP RULES 1966 SI 28/1966 r129(1)

REVENUE COMMISSIONERS V DONNELLY 1983 ILRM 329

COMPANIES (CONSOLIDATION) ACT 1908 S196

COMPANIES ACT 1963 S244

BENI-FELKAI MINING CO LTD, IN RE 1934 CH 406

WINDING UP RULES 1909 r187(2)

COMPANIES (CONSOLIDATION) ACT 1908 S171

BURNS V HEARNE 1986 IR 183

CORPORATION TAX ACT 1976 S1(1)

Synopsis:

REVENUE

Corporation tax

Payment - Priority - Voluntary liquidation - Deposit moneys - Interest accrued - Tax payable in respect of accrued interest - Whether liability for tax a charge properly incurred in the winding up - ~See~ Winding up, creditors - (205/86 - Supreme Court - 25/7/88) - [1988] I.R. 772

|Burns v. Hearne|

WORDS AND PHRASES

"Charges and expenses"

Winding up - Voluntary liquidation - Corporation tax - Payment - Priority - Moneys deposited by liquidator - Tax payable in respect of interest accrued on moneys deposited - Liability for tax a charge properly incurred - ~See~ Winding up, creditors - (205/86 - Supreme Court - 25/7/88) - [1988] I.R. 772

|Burns v. Hearne|

WINDING UP

Creditors

Priorities - Revenue - Corporation tax - Payment - Voluntary winding up - Moneys deposited by liquidator - Tax payable in respect of interest accrued on moneys deposited - Charges and expenses properly incurred in the winding up - Section 281 of the Act of 1963 applies to a voluntary winding up - The section states: "All costs, charges and expenses properly incurred in the winding up, including the remuneration of the liquidator, shall be payable out of the assets of the company in priority to all other claims" - The liquidator of a solvent company in voluntary liquidation came into possession of substantial sums of money - He placed those sums on deposit with the Bank of Ireland and interest accrued on the amount of the deposit - A liability of about #6,200 arose in respect of corporation tax on the accrued interest - The liquidator sought the opinion of the High Court on the question whether the tax liability constituted "charges and expenses properly incurred" within the meaning of s. 281 of the Act - The High Court (Carroll J. - 11/6/86) answered that question in the affirmative - The liquidator appealed against the order of the High Court - Held, in disallowing the appeal, that the liability to corporation tax was a charge within the meaning of s. 281 of the Act of 1963: ~Revenue Commissioners v. Donnelly~ [1983] ILRM 329 and ~In re Beni-Felkai Co.~ [1934] 1 Ch. 406 considered - Companies Act, 1963, s. 281 - (205/86 - Supreme Court - 25/7/88) - [1988] I.R. 772

|Burns v. Hearne|

1 JUDGMENT delivered the 25th day of July 1988 by GRIFFIN J. [Nem Diss]

2 Mr. Alex Burns is the duly appointed liquidator of the above-named company which is in voluntary liquidation. The company is solvent and the Director's declaration of solvency pursuant to s. 256 of the Companies Act, 1963("the Act of 1963") was duly made and registered. In the course of the liquidation the liquidator came into possession of substantial sums of money which he placed on deposit with the Bank of Ireland in an interest bearing account. It is accepted by the liquidator that the interest on those sums is liable to assessment to Corporation Tax, and his estimate of tax liability is approximately £6,200. No demand was made by the Revenue Commissioners in respect of that tax. As he was uncertain as to whether the tax payable is a cost, charge or expense properly incurred in the winding-up within the meaning of s. 281 of the Act of 1963, he applied to the High Court for the determination of that issue. In the High Court Carroll J. held that it is, and that the tax is accordingly payable by him as liquidator. From that determination, the liquidator has appealed to this Court on the ground that the learned trial Judge erred in law in so holding.

3 The sole question for determination in this appeal is, therefore, the interpretation of s. 281 which applies only in the case of a voluntary winding-up, and which is in the following terms:

"281. All costs, charges and expenses properly incurred in the winding-up, including the remuneration of the liquidator, shall be payable out of the assets of the company in priority to all other claims."

4 It was submitted on behalf of the liquidator that

5 (1) the expression "all costs, charges and expenses properly incurred in the winding-up" should be given a restricted or narrow meaning, and that the word "charges" should be limited to fees and similar sums which the liquidator would have been required to pay to such as professional men engaged by him in the course of the liquidation;

6 (2) that whatever may be included in the category of "charges" it should not be the liability of the liquidator;

7 (3) that although Rule 129(1) of the Winding-Up Rules 1966 (S.I. No. 28 of 1966) does not apply to a voluntary winding-up, the interpretation by this Court of that Rule should, by analogy, be applied. That Rule, which appears under the heading "Costs and expenses payable out of the assets of the Company" makes provision (subject to any...