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

• Jurisdiction: Ireland
• Court: High Court
• Judge: Miss Justice Carroll
• Judgment Date: 11 June 1986
• Date: 11 June 1986
• Docket Number: [1985] No. 961 Sp.],No.961SP/1985

1986 WJSC-HC 193

THE HIGH COURT

No.961SP/1985

BURNS v. HEARNE

IN THE MATTER OF A. NOYEK AND SONS LIMITED (IN VOLUNTARY LIQUIDATION)

BETWEEN/

ALEX BURNS

APPLICANT

AND

EDWARD N. HEARNE

RESPONDENT

Citations:

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

COMPANIES ACT 1963

COMPANIES ACT 1963 S244

COMPANIES ACT 1963 S281

COMPANIES CONSOLIDATION ACT 1908 S171

COMPANIES CONSOLIDATION ACT 1908 S196

HIBERNIAN TRANSPORT LTD, IN RE 1984 ILRM 583

MESCO PROPERTIES LTD 1979 1 WLR 558

REVENUE COMMISSIONERS V DONNELLY 1983 ILRM 329

VAN HOOL MCARDLE LTD, IN RE 1980 IR 237 1982 ILRM 340

WINDING UP RULES 1909 R187(1)

WINDING UP RULES 1949 r195(1)

WINDING UP RULES 1966 SI 28/1966 r129

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

WINDING UP RULES 1966 SI 28/1966 r129(3)

Synopsis:

WORDS AND PHRASES

"Charges and expenses"

Company - Winding up - Voluntary liquidation - Moneys placed on deposit by liquidator during liquidation - Corporation tax payable in respect of interest accrued - Held that tax was payable in the priority conferred by s.281 of Act of 1963 - Companies Act, 1963, s.281 - (1985/961 Sp. - Carroll J. - 11/6/86) - [1986] IR 183; [1987] ILRM 508

|Burns v. Hearne|

WINDING UP

Revenue

Corporation tax - Priority of claim - Moneys deposited by liquidator - Interest earned on moneys deposited - Tax payable in respect of interest accrued during winding up - Section 281 of Act of 1963 provides that "all costs, charges and expenses properly incurred in the winding up" shall be payable out of the assets of the company in priority to all other claims - Held that the corporation tax claimed in respect of the deposit interest was payable in the priority conferred by s.281 of the Act of 1963 - Companies Act, 1963, s.281 - (1985/961 Sp. - Carroll J. - 11/6/86) - [1986] IR 183; [1987] ILRM 508

|Burns v. Hearne|

REVENUE

Corporation tax

Company - Winding up - Voluntary liquidation - Priority of claim - Tax in respect of income accrued during liquidation on moneys placed on deposit by liquidator - Held that tax was payable out of the assets of the company in priority to all other claims as provided by s.281 of Act of 1963 - Companies Act, 1963, s.281 - (1985/961 Sp. - Carroll J. - 11/6/86) - [1986] IR 183; [1987] ILRM 508

|Burns v. Hearne|

1 Judgment of Miss Justice Carrolldelivered on the 11th day of June 1986.

2 The Applicant as Liquidator of A. Noyek and Sons Limited in voluntary liquidation has applied to the Court to determine whether Corporation Tax payable in respect of interest earned on moneys kept on deposit by him during the winding up is a cost, charge or expense properly incurred in the winding up within the meaning of Section 281 of the Companies Act 1963.

3 This section provides as follows:-

"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 The question is the first and main issue raised in the Summons as both the Liquidator and the Revenue Commissioners are agreed that Rule 129 of the 1966 Winding up Rules (Order 79) (S.I.No.28 of 1966) does not apply to a voluntary windin up.But even though it does not apply, the decision of the Supreme Court In Re Van Hool McArdle Limited In Liquidation, Revenue Commissioners vDonnelly, 1983 I.L.R.M. 329, must be considered.

5 In that case the Supreme Court considered the meaning of the third category of priorities contained in Rule 129(1) of the 1966 Rules, viz. "The necessary disbursements of the Official Liquidator other than the expenses properly incurred in preserving, realising or getting in the assets herein before provided for." The Rule appears under the heading "Costs and Expenses Payable out of the Assets of theCompany".

6 O'Higgins C.J.in his judgment at page 331 states

"In my view Rule 129, as its heading indicates, is intended to deal with costs and expenses and not with liabilities of thecompany."

7 He held that the third category must be expenses of some kind other than those specifically mentioned and could not include a liability of the company for Corporation Tax.

8 Another case in which Rule 129 was considered was In Re HibernianTransport Limited (In Liquidation) and Ors. 1984 I.L.R.M. 583,which concerned winding up by the Court. There the issue was how thecompanies" admitted liabilities as to (inter alia) Corporation Tax on deposit interest on moneys held by the Liquidator since winding up, was to be discharged. The questions for the Court were (a) whether it was "necessary disbursement" under Rule 129(1)(3) of the 1966 Rules, (b) whether it was a preferential payment or (c) whether it ranked as an unsecured debt. All questions were answered in thenegative.

9 Costello J. held that in the light of the Supreme Court decision in the Van Hool McArdle case,...