Re Ranks (Ireland) Ltd

• Jurisdiction: Ireland
• Judge: Mr. Justice Murphy
• Judgment Date: 01 January 1989
• Neutral Citation: 1988 WJSC-HC 618
• Docket Number: 8113, oct 6/1983,[1983 No. 8113 P Ct. 6]
• Court: High Court
• Date: 01 January 1989

1988 WJSC-HC 618

THE HIGH COURT

8113, oct 6/1983

In re RANKS (IRELAND) LTD

IN THE MATTER OF RANKS (IRELAND) LIMITED

AND

IN THE MATTER OF THE COMPANIES ACTS 1963 TO 1983

Citations:

COMPANIES ACT 1963 S290

KISBEY LAW & PRACTICE OF BANKRUPTCY IN IRELAND

BANKRUPTCY (IRL) (AMDT) ACT 1872 S97

TEMPANY V ROYAL LIVER TRUSTEES LTD 1984 ILRM 273

OAK PITS COLLIERY 1882 21 CH 322

H H REALIZATIONS LTD 1975 31 P & CR 249

GRANT V ASTON LTD 1969 103 ILTR 39

LLYNVI COAL & IRON CO (HYDE,IN RE) 7 CH APP 28

BANKRUPTCY (IRL) (AMDT) ACT 1872 S97(9)

Synopsis:

WINDING UP

Onerous property

Disclaimer - Leave of court - Liquidator's application - Telephone equipment - Hiring and maintenance charges - Long-term contracts - Liquidation expenses - Owner's rights - By three contracts made between 1976 and 1979 the company agreed to pay to the supplier the hire charges of certain telephone equipment for periods of 14 years - The company also entered into maintenance contracts with the supplier in respect of the same equipment - On 5/12/83 the court ordered that the company be wound up - On 18/2/85 the High Court gave the liquidator leave to disclaim the company's obligations under the hire contracts with the supplier, and gave the liquidator liberty to pay the supplier liquidation expenses amounting to #11,272 being the amount of the rentals due on foot of the hire contracts from 22/11/83 (the commencement of the winding up) to 4/2/85 - Held that the supplier was entitled to prove as a creditor in the winding up, pursuant to s.290, sub-s.9, of the Act of 1963, for the loss sustained by the supplier by reason of the disclaimer - Held that the measure of the supplier's damages was the difference between the amount which the supplier would have received under the contracts of hire and the amount which the supplier would be likely to receive from the hire of the same equipment during the remainder of the contract term, less the amount received as liquidation expenses: ~In re Llynvi Coal & Iron Co.~ 7 Ch. App. 28 considered - Held that the suppliers' damages should be assessed as at the date of the commencement of the winding up - Companies Act, 1963, s.290 - (1983/8113 P - Murphy J. - 16/11/87) [1988] ILRM 751 [1989] IR 1

|In re Ranks (Ir.) Ltd.|

1 Judgment of Mr. Justice Murphy delivered the 16th day of November, 1987.

2 The Application herein raises a question concerning the interpretation and effect of Section 290 of the Companies Act 1963, that is to say, the section entitling???query??? ???certain circumstances to disclaim property???query??? ???covenants.

3 The history of the disclaimer provisions as enacted originally in the Bankruptcy Acts and more recently in the Companies Acts has given rise to considerable confusion both here and in England.

4 At the turn of the century Judge Kisbey in his book on the Law and Practice of Bankruptcy in Ireland recognized that Section 97 (the disclaimer section) in the Bankruptcy (Ireland) Amendment Act 1872 had given rise to complications never contemplated by the legislature. Indeed it is easy to see that if and insofar as a disclaimer were to operate as a surrender it might work grave injustice to persons other than the bankrupt or creditors of his estate. These complications arise particularly where leasehold property has been sublet or mortgaged by a bankrupt or where the obligations of the bankrupt lessee are the subject matter of guarantees.

5 Any analysis of the history of the disclaimer provisions and the various cases to which these provisions have given rise has to take into account the further problem that the bankruptcy code in England differed from the bankruptcy code here in relation to the right of disclaimer. The matter is then further complicated by the fact that there is a fundamental distinction to be drawn between the liquidation of a company and the bankruptcy of an individual which may affect the operation of the disclaimer provisions subsequently introduced into Company Law in 1929 in the U.K. and in 1963 here notwithstanding the similarity of the actual statutory provisions. In Company Law there is no cessio bonorum as there is in bankruptcy. The property of the company remains vested in the company and does not vest in the Official Liquidator unless an express Order in that behalf is made by the High Court under Section 230 of the Companies Act 1963.This legal distinction may be associated with a more fundamental difference between the two classes of insolvency, that is to say, the individual survives the bankruptcy, and may indeed retain obligations which subsisted prior to the commencement thereof, whilst the conclusion of the liquidation envisages the dissolution of the corporate body and disappearance of the legal person by whom the pre-liquidation obligations were incurred. Happily these troublesome provisions have been the subject matter of a full and carefull review by Mr. Justice Keane in Tempany and Royal Liver Trustess Limited 1984 I.L.R.M. 273 so that it is unnecessary for me to attempt a comparable exercise. Quite apart from the convention of following decisions by Judges of co-ordinate jurisdiction I am fully convinced by the reasoning of my learned colleague's judgment.

6 The present case is a simple one in the sense that the only parties directly affected by the performance or otherwise of the onerous contracts are the parties thereto and the creditors of the company. The complications, such as they are, do not arise as a result of assignment, subletting,...