Re Pat Ruth Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Costello
• Judgment Date: 04 February 1981
• Neutral Citation: 1981 WJSC-HC 1200
• Docket Number: 3862F-1979
• Court: High Court
• Date: 04 February 1981

1981 WJSC-HC 1200

3862F-1979

PAT RUTH LTD, in re

PAT RUTH LIMITED

1 JUDGMENT Delivered by Mr. Justice Costelloon Wednesday, 4 February 1981

2 Judgment delivered by Mr. Justice Costelloon Wednesday, the 4th, February 1981.

3 The Liquidator of Pat Ruth Limited has applied to the Court for directions arising from the following set of facts:

4 On 21 June 1979 a petition was presented to wind up the company. By virtue of Section 220 of the Act, the winding up is deemed to commence from that date, an order to wind up the company having been subsequently made on 9 July 1979.

5 At the time of the presentation of the petition the Company had a current account with Allied Irish Banks, South Mail, Cork. Overdraft facilities had been granted by the Bank to the extent of £15,000and on 20 June the company was overdrawn to the extent of£9,134.26. On 22 June, that is to say, the day after the presentation of the petition, a lodgment was made to the company's current account in the sum of £2,500. On 28 June a second lodgment was made amounting to £10,000 and on 3 July a third lodgment was made amounting to £1,500, making a total lodgment of£14,000.

6 Notice of the presentation of the petition was advertised in the normal way, the advertising appearing in The Cork Examiner on 28 June and in other national daily papers as well, and in Irish Oifigiuil on 29June.

7 However, the evidence establishes - and this is not contradicted - that actual notice of the presentation of the petition was not received by the Bank until 29 June, on which date the fact of the presentation of the petition was made known to the Manager of the Bank's Branch in South Mail, Cork.

8 On 9 July an order winding up the company was made and a liquidator appointed and on 10 July the account of the company with the Bank was closed. Payments out of the company's account with the Bank were made between 21 June and 9 July.

9 In the course of his evidence on affidavit the liquidator has stated that the cheques were drawn on the company's account pursuant to transactions bona fide entered into and completed in the course of the company's current trading or in discharge of the company's day-to-daydebts and expenses. The liquidator stated his belief that the payments were necessary for the efficient conduct of the liquidation and were in the best interests of all parties in the proceedings, including thecreditors.

10 The list of payments made by cheque out of the account is included in Exhibit B of the liquidator's affidavit.

11 The first matter that arises for consideration on this application is the nature of the payments made into the company's bank account and out of the company's bank account to the Exhibit B creditors.

12 Section 218 of the Companies Act, 1963provides:

13 In a winding up by the Court, any disposition of the property of the company, including things in action, and any transfer of shares or alteration in the status of the members of the company, made after the commencement of the winding up, shall, unless the Court otherwise orders, be void.

14 I am quite satisfied that each of the payments into the company's bank account by way of the three lodgments to which I have referred amounts to a "disposition" within the meaning of Section 218 of theAct.

15 This has not been contested in the course of the submissions made to me and the nature of this transaction in a similar case in the English Courts has been referred to.

16 The Court of Appeal clearly indicated that lodgments in such circumstances amounted to a "disposition" within the meaning of the corresponding English section. (See In re Gray's Inn Construction Co. Ltd. (1980) 1 Weekly Law Reports, Page 711).Similarly, the payments out to the third parties by means of the cheques referred to in Exhibit are "dispositions" within the meaning of the Section. Therefore, prima facie, all these payments are void unless validated by a Court Order under Section 218.

17 As to the payments out of the account to the Exhibit B creditors, it has been accepted by the liquidator that these were properly made and he agrees that an order validating them should be made. I accept that he is correct in his view and I am prepared to make an order validating the Exhibit B payments.

18 The liquidator accepts that the lodgments to which I have referred can be...