Re, Springline Ltd ((in Liquidation))

• Jurisdiction: Ireland
• Judge: Keane, J.
• Judgment Date: 01 January 1999
• Neutral Citation: 1998 WJSC-SC 12385
• Court: Supreme Court
• Docket Number: [1996 No. 120 Cos; S.C. No. 369 of 1997],369/1997
• Date: 01 January 1999

IN RE SPRINGLINE LTD

IN THE MATTER OF SPRINGLINE LIMITED(IN LIQUIDATION)

AND

IN THE MATTER OF THE COMPANIES ACTS 1963– 1990

1998 WJSC-SC 12385

369/1997

THE SUPREME COURT

Synopsis

- [1999] 1 IR 478 - [1999] 1 ILRM 15

Citations:

COMPANIES (AMDT) ACT 1990 S29(3)

WEST WAKE PRICE & CO V CHING 1956 3 AER 820

COMPANIES ACT 1963 S281

HOLIDAIR LTD, IN RE 1994 1 IR 416

DON BLUTH ENTERTAINMENT LTD, IN RE 1994 3 IR 141

HMIL LTD (HIBERNIAN MEATS LTD) V MIN AGRICULTURE UNREP BARR 8.2.1996 1996/5/1371

MERCHANT BANKING LTD, IN RE 1987 ILRM 260

RED BREAST PRESERVING CO, IN RE 1958 IR 234

COMPANIES (AMDT) ACT 1990 S37(3)

1 JUDGMENT delivered the 22nd day of July 1998, by Keane, J. [NEM I

2 This case raises a net but important point of law. Shortly stated, the question is whether the remuneration, costs and expenses of an examiner of a company must be paid in full out of the assets of the company before any of the costs of a liquidator appointed by the High Court after the examiner has ceased to act.

3 In the present case, Mr. Rory O'Ferral was appointed to be the examiner of Springline Limited (hereafter "the company";) on the 26th February 1996. Having examined the company's affairs, the examiner concluded that it would not be possible to formulate a scheme of arrangement which would facilitate the survival of the company as a going concern and, accordingly, the court, having been so informed, ordered that the company should cease to be under the protection of the court. On the 10th June 1996, the High Court ordered that the company should be compulsorily wound up and Mr. Patrick McSweeney was appointed the official liquidator.

4 On the 29th July 1996 and the 9th October 1996, the examiner applied to the High Court for orders sanctioning the payment to him of sums amounting to £54,210.28 (including VAT) in respect of costs, remuneration and expenses. The liquidator then applied to the High Court for a determination inter alia as to the priority, if any, to be given in the winding up to that claim. In the course of his affidavit, the liquidator deposed that there was likely to be a shortfall in the assets realised in the winding up in the event of the examiner's claims being discharged on the basis that they had priority over any other claim. He further deposed that, if that priority was granted, there would be unlikely to be sufficient assets to discharge his (the liquidator's) remuneration, costs and expenses. In a reserved judgment, Shanley J. concluded that the examiner's remuneration, costs and expenses did not enjoy priority over the remuneration, costs and expenses of the official liquidator. From that decision, the examiner now appeals to this court.

5 The case turns on the construction to be given to s.29(3) of the Companies (Amendment) Act 1990which is as follows:-

"The remuneration, costs and expenses of an examiner which have been sanctioned by order of the court shall be paid in full and shall be paid 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";

6 The learned High Court judge concluded that the remuneration, costs and expenses of a liquidator appointed by the court in a compulsory winding up could not properly be described as a "claim"; or a debt and that, accordingly, the subsection did not confer the priority claimed on behalf of the examiner.

Submissions on behalf of the Parties

7 On behalf of the Examiner, Mr. McBratney SC submitted that the word "claim"; in s.29(3) should be given its ordinary and natural meaning. So construed, he said, it referred to a demand for something which was due and clearly applied to the liquidator's entitlement to his remuneration, costs and expenses. He cited in support West Wake Price & Company v. Ching [1956] 3All ER 820.

8 Mr. McBratney further submitted that the wording of s.281 of the Companies Act 1963(hereafter "the Principal Act";) affording the liquidator's costs in a voluntary winding up priority over "other clamis"; unquestionably treated the liquidator's entitlement to his costs as a "claim";. It could not have been envisaged, he urged, that a distinction should be drawn in this connection between the costs in a voluntary winding up and one by the court.

9 Mr.McBratney further submitted that the decision of the High Court did not taken into account the fact that s.29(3) gave priority to the examiner's costs over secured as well as unsecured creditors and that it had been held by this court in Holidair Limited [1994] 1 IR 416that this meant that, where the unsecured assets of the company were insufficient to meet the examiner's remuneration, costs and expenses, he could have recourse to the secured assets and thus obtain priority over the liquidator, since the latter was not entitled to avail of those assets. He said it would be an anomalous result if the examiner's ability to recover these sums in priority to the liquidator depended on whether the company happened to have secured assets. He also relied on the decision of this court in Re: Don Bluth Entertainment Limited [1994] 3 IR 141.

10 On behalf of the liquidator, Mr. John Gleeson submitted that the word "claim"; in s.29(3) should be construed in the context in which it appears in the statute. He said that the reference in the subsection to a "claim, secured or unsecured"; was a clear indication that the legislature was concerned with the claims of creditors rather than with the "operating costs"; of a liquidation and that, in the context, the maxim noscitur a sociis should be applied, citing the decision of Barr J. in Re: Hibernian Meats Limited (unreported; judgment delivered February 8th, 1996.)

11 Mr. Gleeson further submitted that there was a distinction between the claims and debts provable in a winding up and the remuneration, costs and expenses of the liquidator. The former fell to be ascertained at the commencement of the winding up and, in the case of a compulsory...