Revenue Commissioners v Ladaney Ltd (in voluntary liqidation)
| Jurisdiction | Ireland |
| Judge | Ms. Justice Finlay Geoghegan |
| Judgment Date | 26 March 2015 |
| Neutral Citation | [2015] IECA 62 |
| Date | 26 March 2015 |
| Court | Court of Appeal (Ireland) |
| Docket Number | Appeal No. 2014/1382 [Article 64 Transfer Case] |
[2015] IECA 62
COURT OF APPEAL
Finlay Geoghegan J.
Peart J.
Hogan J.
Appeal No. 2014/1382
[Article 64 Transfer Case]
In the matter of Ladaney Limited (In voluntary liquidation)
In the matter of the Companies Acts 1963 to 2013
In the matter of sections 267 and 282 of the Companies Act 1963
Company Law – Companies Act 1963 – Voluntary Liquidation – Creditors – Voting
Facts: A company appointed a liquidator at a creditors meeting pursuant to s. 266 of the Companies Act 1963 for the purposes of winding up. The creditors elected the liquidator by way of a vote. The appellant sought an order pursuant to Order 74 of the Rules of the Superior Courts to set aside the decisions made at the creditors” meeting. The Chairman had decided not to exclude invalid proxies and not to allow proof of the Company”s debt that was due to the Revenue in the amount of €371,785.00. The appellant also sought an order pursuant to s. 267(2) of the Companies Act 1963 for an alternative liquidator to be appointed in place of the existing one.
The trial judge determined that the proxies were invalid and the appointees of those creditors” as proxies should not have been accepted. Furthermore, the trial judge concluded that that the liquidator that was originally appointed was validly appointed at the creditors meeting. The Revenue subsequently appealed against the High Court judgment. The Revenue had three grounds of appeal. Firstly, the trial judge exceeded his jurisdiction in determining that the Revenue was not entitled to vote. Secondly, the trial judge was incorrect to determine that any part of the Revenue debt was unascertained and thirdly, the trial judge erred in law by refusing to admit the Revenue”s proof. The Revenue also objected to the level of participation by the originally appointed liquidator in the High Court and appeal proceedings.
Held by Finlay Geoghegan J: The court determined that it was not inappropriate for the liquidator to participate in the application. However, the court determined that the trial judge did not have jurisdiction to set aside the chairperson”s decision. The court allowed the appeal against the trial judge”s decision that the Revenue was not entitled to vote in respect of any value of debt. The court determined that the Revenue was entitled to vote based on the value of €75,375. This meant the creditors validly voted in favour of the alternative liquidator. The court allowed the appeal and made an order to appoint the alternative liquidator in place of the originally appointed liquidator.
On the 15th July, 2014, the members of Ladaney Limited (‘the Company’) passed a resolution that it be wound up voluntarily. The Company was satisfied that by reason of its liabilities it could not continue in business. The members also resolved that Anthony Fitzpatrick be appointed liquidator for the purposes of the winding up.
A creditors meeting had been called pursuant to s. 266 of the Companies Act 1963 for 4.30 pm on the 15th July, 2014. At the meeting, chaired by Mrs. Ann Carter, a director of the Company. The Revenue Commissioners (the ‘Revenue’) proposed that Mr. Barry Donohue be appointed liquidator.
Mrs. Carter, as chairman of the meeting, held a number of proxies from creditors. The Revenue objected to the validity of certain of those proxies. The chairman ultimately ruled that all of the proxies, including the Revenue's proxy, were valid.
The Revenue also sought to have the value attributed to their vote based on their claim that the debt due to them was €371,785. The statement of affairs prepared by the directors for the purposes of the meeting had included a Revenue debt of €75,375.
Following exchanges at the meeting, inspection of the proxies by the Revenue and objection made to most, the minutes of the meeting state ‘The chair ruled that all of the proxies including the Revenue's proxy were valid’. There was then a vote taken on the two proposals for liquidator, i.e., Mr. Fitzpatrick nominated by the Company or Directors and Mr. Donohue proposed by the Revenue Commissioners. The result of the vote in terms of the value of the creditors voting by proxy as recorded in the minutes was:
Anthony J. Fitzpatrick €81,324
Barry Donohue €75,375
Mr. Fitzpatrick was declared elected as liquidator and thereafter commenced the winding up of the Company. It is of relevance to the issues on this appeal to note that Mr. Fitzpatrick, whilst originally nominated as liquidator by the members, was the liquidator elected on a vote by value of the creditors at the meeting of creditors.
By an originating notice of motion dated the 23rd July, 2014, the Revenue sought the following reliefs:
‘1. An order pursuant to Order 74 of the Rules of the Superior Courts setting aside by way of appeal the following decisions reached by the Chairperson of the Creditors' meeting held on the 15th July, 2014, at The Central Hotel, Tullamore, Co. Offaly:
a. The decision not to exclude invalid proxies of Roken Construction Limited, O'Hara Dolan, Devery Farrelly & Co., Michael Walsh & Son Limited, Avonlee Soap Co. Limited and O'Hara Donal; and
b. The decision not to allow proof of the full value of the debt due by the Company to the Revenue Commissioners namely, €371,785.00.
2. An order pursuant to s. 267(2) of the Companies Act 1963, directing that Barry Donohue of O'Connor Payne & Co. Chartered Accountants and Registered Auditors be appointed as liquidator of the company in place of the second named respondent.’
They also sought other consequential reliefs.
No other appeal or application was made to the High Court arising out of the meeting of creditors or the nomination of Mr Fitzpatrick as liquidator.
In the High Court, affidavits of Ms Griffin were filed on behalf of the Revenue, and by Mr. Fitzpatrick as liquidator of the Company and Mrs. Carter.
The application was heard on the 15th August during the vacation and on the 26th August Herbert J. delivered a written judgment in which in summary he held:
(a) The proxies submitted by Michael Walsh and Son Limited, Roken Construction Limited, O'Hara, Dolan and Company Limited, Avonlee Soap Company Limited were invalid and the chairperson of the creditors meeting should not have accepted the appointees of those creditors as proxies for the purpose of voting. The remaining proxies challenged were valid.
(b) The chairperson of the meeting was correct and acting within the provisions of Ord. 74, r. 71 of the Rules of the Superior Courts in refusing to admit the Revenue Commissioner's proof of €371,785 for the purpose of voting. The reason of the trial judge for this decision was that the value of the Revenue debt was not ‘ascertained’ within the meaning of Ord. 74, r. 68 of the Rules of the Superior Courts 1986 and hence the Revenue Commissioners were not entitled to vote in respect thereof. That finding related to the entire value of the Revenue debt including the sum of €75,375 specified as the Revenue debt in the statement of affairs and in respect of which the chairperson of the meeting had admitted the Revenue to vote by proxy.
The trial judge further concluded by reason of those two decisions that Mr. Fitzpatrick was validly appointed as liquidator of the Company at the creditors meeting. In consequence he made an order that the Revenue's application be refused and also made a consequential costs order.
The Revenue appealed against that order and judgment. The grounds of appeal in summary are:
(i) The trial judge exceeded his jurisdiction in determining that the Revenue were not entitled to vote at the creditors meeting with a value attributable to their debt at minimum in the sum of €75,375 as included in the statement of affairs.
(ii) The trial judge was incorrect in determining that any part of the claimed Revenue debt of €371,785.25 was unascertained within the meaning of Ord. 74, r. 68 of the Rules of the Superior Courts.
(iii) The trial judge erred in law in determining that the chairman of the creditors meeting was acting in accordance with Ord. 74, r. 71 of the Rules of the Superior Courts in refusing to admit the Revenue's proof in the value of €371,785.25 for the purpose of voting.
There is no cross appeal against the determination of the trial judge of the invalidity of the proxies from the four named creditors whose debts aggregated €34,229 in value.
The grounds of appeal were opposed on behalf of the respondents who were represented by solicitor and counsel. Objection was taken on behalf of the Revenue to the extent to which Mr. Fitzpatrick as liquidator participated, both personally and as liquidator on behalf of the Company before the High Court and on the appeal. It is unusual for a liquidator whose initial appointment is challenged to so participate. However, the Revenue in bringing this application named the Company (In voluntary liquidation) and Mr. Fitzpatrick as respondents to the application. Whilst in their application they were appealing the determination of Mrs. Carter as chairperson of the meeting they did not join her as a respondent. She was only made a notice party to the proceedings notwithstanding that the principal appeal was against her rulings. There was no challenge to the resolution to wind up as such and as Mr. Fitzpatrick had been appointed liquidator, he was then the appropriate person to give instructions on behalf of the Company which Revenue named as respondent. Further he was personally named as a respondent. An order was sought pursuant to s. 267(2) of the 1963 Act, that he be replaced as liquidator.
In such circumstances, it does not appear to me that it was inappropriate for him to have participated in the application. If the Company had...
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