Re Sharmane Ltd and the Companies Acts 1963-2006

JurisdictionIreland
JudgeMs. Justice Finlay Geoghegan
Judgment Date17 December 2009
Neutral Citation[2009] IEHC 556,[2009] IEHC 377
CourtHigh Court
Docket Number[2008 No. 514 COS]
Date17 December 2009

[2009] IEHC 377

THE HIGH COURT

[No. 514 COS/2008]
Sharmane Ltd, In re
[2009] IEHC 377
IN THE MATTER OF SHARMANE LIMITED
AND IN THE MATTER OF THE COMPANIES ACTS 1963 -2006
AND IN THE MATTER OF GUERNEVILLE LIMITED
AND IN THE MATTER OF THE COMPANIES ACTS 1963 -2006
AND IN THE MATTER OF DREEMDALE LIMITED
AND IN THE MATTER OF THE COMPANIES ACTS 1963 -2006
AND IN THE MATTER OF EATONCROFT LIMITED
AND IN THE MATTER OF THE COMPANIES ACTS 1963 -2006
AND IN THE MATTER OF REDFONT LIMITED
AND IN THE MATTER OF THE COMPANIES ACTS 1963 -2006
AND IN THE MATTER OF CHARDERMONT LIMITED
AND IN THE MATTER OF THE COMPANIES ACTS 1963 -2006
AND IN THE MATTER OF PUB POOL LIMITED
AND IN THE MATTER OF THE COMPANIES ACTS 1963 -2006
AND IN THE MATTER OF DREW INTERNATIONAL LIMITED
AND IN THE MATTER OF THE COMPANIES ACTS 1963 -2006
AND IN THE MATTER OF LINCOLE LIMITED
AND IN THE MATTER OF THE COMPANIES ACTS 1963 -2006
AND IN THE MATTER OF ATWELL HOLDINGS LIMITED
AND IN THE MATTER OF THE COMPANIES ACTS 1963 -2006
AND IN THE MATTER OF JESTDALE LIMITED
AND IN THE MATTER OF THE COMPANIES ACTS 1963 -2006
AND IN THE MATTER OF KIRKVALE LIMITED
AND IN THE MATTER OF THE COMPANIES ACTS 1963 -2006
AND IN THE MATTER OF KADARAN LIMITED
AND IN THE MATTER OF THE COMPANIES ACTS 1963 -2006
AND IN THE MATTER OF TOPART LIMITED
AND IN THE MATTER OF THE COMPANIES ACTS 1963 -2006
AND IN THE MATTER OF FLORDITA (IRELAND) LIMITED
AND IN THE MATTER OF THE COMPANIES ACTS 1963 -2006
Sharmane Ltd, In re
(AS RELATED COMPANIES WITHIN THE MEANING OF SECTOIN 4(5) OF THE COMPANIES (AMENDMENT) ACT 1990 )
(AS RELATED COMPANIES WITHIN THE MEANING OF SECTION 4(5) OF THE COMPANIES (AMENDMENT) ACT 1990 )
AND IN THE MATTER OF THE COMPANIES (AMENDMENT) ACT 1990

COMPANIES (AMDT) ACT 1990 S2

COMPANIES (AMDT) ACT 1990 S4(1)(A)

COMPANIES (AMDT) ACT 1990 S4(5)

COMPANIES (AMDT) ACT 1990 S26(1)(B)

COMPANIES (AMDT) ACT 1990 S24

COMPANIES (AMDT) ACT 1990 S26

COMPANIES (AMDT) ACT 1990 S29

COMPANIES (AMDT) ACT 1990 S29(2)

COMPANIES (AMDT) ACT 1990 S2(1)

COMPANIES (AMDT) ACT 1990 S4

COMPANIES (AMDT) ACT 1990 S4(3)

COMPANIES (AMDT) ACT 1990 S4(4)

COMPANIES (AMDT) ACT 1990 S18(1)(A)

COMPANIES (AMDT) ACT 1990 S29(3)

COMPANIES (AMDT) ACT 1990 S29(3B)

WOGANS (DROGHEDA) LTD, IN RE UNREP COSTELLO 9.2.1993 1993/9/2783

COMPANIES (AMDT) ACT 1990 S29(1)

COMPANY LAW

Examinership

Costs of examiner - Related companies - Joint and several liability - Companies (Amendment) Act 1990 (No 27), s 29 - Group not jointly liable for costs of examiner (2008/514COS - Finlay Geoghegan J - 30/7/2009) [2009] IEHC 377

Re Sharmane Ltd

1

On 4 th December, 2008, Mr. Kieran McCarthy ("the Examiner") was appointed examiner of Sharmane Limited pursuant to s. 2 of the Companies (Amendment) Act 1990 ("the Act"). He was also appointed pursuant to s. 4(1)(a) of the Act, as examiner to each of the companies named in the title other than Guerneville Limited (the petitioner) and Floridita (Ireland) Limited. All those companies are related companies of Sharmane Limited within the meaning of s. 4(5) of the Act. Insofar as I refer to the related companies in this judgment, I am only referring to those related companies to which the Examiner was appointed.

2

On 23 rd February, 2009, upon the application of the Examiner, the Court ordered pursuant to s. 26(1)(b) of the Act, that Eatoncroft Limited, Jestdale Limited, Kadaran Limited, and Topart Limited cease to have the protection of the Court and that they be wound up by the Court pursuant to the provisions of the Companies Acts 1963-2006. Mr. Anthony Weldon was appointed official liquidator of those four companies and the Examiner ceased to have any further function in relation thereto.

3

On 6 th March, 2009, the Examiner presented his reports to the Court proposing schemes of arrangement in relation to each of the nine remaining companies in examinership. The reports were set down for consideration pursuant to s. 24 of the Act, on 13 th March, 2009. Confirmation of the proposals for the schemes of arrangement was opposed by ACC Bank plc. and certain other parties.

4

On 20 th March, 2009, in the course of the continued confirmation hearing, the Court was informed that the Examiner was no longer recommending that the Court confirm the schemes of arrangement. Difficulties had arisen with the investor whose investment was essential for the funding of the proposed schemes of arrangement.

5

By order of the High Court made on 20 th March, 2009, pursuant to s. 26 of the Act, the protection period ceased for all remaining nine companies. ACC Bank plc. appointed a receiver over those companies or their assets. Ulster Bank Limited also appointed a receiver over certain assets of The Pub Pool Limited. In such circumstances no winding-up orders were made.

6

The Examiner now seeks pursuant to s. 29 of the Act, an order determining his remuneration, costs and expenses as both interim examiner and examiner of all the relevant companies. Certain creditors were put on notice and ACC Bank plc. and Ulster Bank Limited were represented at the hearing and opposed, in part, the orders sought by the Examiner.

7

The primary order sought by the Examiner was an order that all thirteen companies to which he was initially appointed be jointly and severally liable for such amount as may be determined in respect of his aggregate remuneration, costs and expenses as Examiner of the thirteen companies. In submissions this may have been altered to an order that all thirteen companies be jointly and severally liable up to 23 rd February, 2009, and that the remaining nine companies be jointly and severally liable thereafter. Nothing turns on this distinction.

8

Both ACC Bank and Ulster Bank opposed any order on a basis of joint and several liability. They submitted, as a matter of principle, that the Court had no jurisdiction pursuant to s. 29 of the Act, to make an order that Sharmane Limited and either twelve or eight related companies be jointly and severally liable for the aggregate remuneration, costs and expenses incurred by the Examiner whilst appointed as examiner to Sharmane Limited and each of the related companies. They also opposed the quantum sought to be determined by the Examiner in respect of his own remuneration and his legal costs on the basis set out below.

9

At the end of the hearing, I had formed a clear view on the point of principle in dispute between the parties and gave my decision, indicating that I would give my reasons for my decision in a written judgment. The first part of this judgment sets out those reasons.

10

I concluded that s. 29 of the Act does not give the Court jurisdiction to make a an order that all companies be jointly and severally liable for the aggregate remuneration.costs and expenses as sought by the Examiner. My reasons for so concluding derive principally from the wording of s. 29 considered in the context of the entire Act.

11

Section 29 provides:

2

"(1) The court may from time to time make such orders as it thinks proper for payment of the remuneration and costs of, and reasonable expenses properly incurred by, an examiner.

(2) Unless the court otherwise orders, the remuneration, costs and expenses of an examiner shall be paid and the examiner shall be entitled to be indemnified in respect thereof out of the revenue of the business of the company to which he has been appointed, or the proceeds of realisation of the assets (including investments).

(3) The remuneration, costs and expenses of an examiner which have been sanctioned by order of the court (other than the expenses referred to in subsection (3A)) shall be paid in full and shall be paid before any other claim, secured or unsecured, under any compromise or scheme of arrangement or in any receivership or winding-up of the company to which he has been appointed.

a (3A) Liabilities incurred by the company to which an examiner has been appointed that, by virtue of section 10(1), are treated as expenses properly incurred by the examiner shall be paid in full and shall be paid before any other claim (including a claim secured by a floating charge), but after any claim secured by a mortgage, charge, lien or other encumbrance of a fixed nature or a pledge, under any compromise or scheme of arrangement or in any receivership or winding-up of the company to which he has been appointed.

b (3B) In subsections (3) and (3A) references to a claim shall be deemed to include references to any payment in a winding-up of the company in respect of costs, charges and expenses of that winding-up (including the remuneration of any liquidator).

(4) The functions of an examiner may be performed by him with the assistance of persons appointed or employed by him for that purpose provided that an examiner shall, insofar as is reasonably possible, make use of the services of the staff and facilities of the company to which he has been appointed to assist him in the performance of his functions.

(5) In considering any matter relating to the costs, expenses and remuneration of an examiner the court shall have particular regard to the proviso to subsection (4)."

12

The order for joint and several liability sought by the Examiner would have to be consistent with s. 29 and, in particular, sub-section (2) thereof.

13

Section 29 has to be considered in the context of the statutory scheme for the appointment of a person as examiner to a company and to related companies of that company. Section 2 provides for the appointment of a person as an examiner to a company "for the purpose of examining the state of the company's affairs and performing such duties in relation to the company as may be imposed by or under this Act". It is to be noted that the purpose for which a person is appointed an examiner to a company pursuant to s. 2(1) is confined to examining the...

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