Robinson v Forrest

• Jurisdiction: Ireland
• Judge: Ms. Justice Laffoy
• Judgment Date: 11 February 1999
• Neutral Citation: [1999] IEHC 103
• Docket Number: No. 1968P/1992,[1992 No. 1968 P]
• Court: High Court
• Date: 11 February 1999

[1999] IEHC 103

THE HIGH COURT

No. 1968P/1992

ROBINSON v. FORREST (FERNGARA ASSOCIATES LTD)

IN THE MATTER OF FERNGARA ASSOCIATES LIMITED (IN RECEIVERSHIP AND

IN LIQUIDATION)

AND IN THE MATTER OF THE COMPANIES ACTS 1963 TO 1990

BETWEEN

GERARD ROBINSON

APPLICANT

AND

BARRY FORREST

OFFICIAL LIQUIDATOR OF FERNGARA ASSOCIATES LIMITED (IN RECEIVERSHIP AND IN LIQUIDATION)

RESPONDENT

Citations:

COMPANIES ACT 1990 S152

COMPANIES ACT 1990 S150

COMPANIES ACT 1963 S245

COMPANIES ACT 1963 S297A

COMPANIES ACT 1963 S298

COMPANIES ACT 1990 (PART IV & PART VII) REGS 1991 SI 209/1991

COMPANIES ACT 1990 S150(3)

BUSINESS COMMUNICATIONS LTD V BAXTER UNREP MURPHY 21.7.1995 1995/6/1869

COMPANIES ACT 1990 S155

COMPANIES ACT 1990 S156

Synopsis

Company Law

Winding up; restrictions on directors of insolvent companies; application pursuant to s.152, Companies Act, 1990 for relief in respect of restrictions imposed; the manner in which a liquidator must prove that he has complied with his obligation under the section; whether it was just and equitable to grant relief; whether the deterrent effect of the order would be undermined

Held: Relief granted; on the facts it was just and equitable to grant the relief; on an application under s.152 the liquidator should personally swear an affidavit that he has notified all of the creditors and contributories of the company who are known to him of the receipt by him of the application and of the return date of the application

Robinson v. Forrest - High Court: Laffoy J. - 11/02/1999 - [1999] 1 IR 426 - [1999] 2 ILRM 169

The Court was satisfied that the facts of this case, where the applicant had learned an expensive lesson, were exceptional and had to have particular regard to the view of the late Mr Justice Shanley who had stayed the operation of the restriction order and extended that stay on the adjournment of this application. The High Court so held in saying that it would be just and equitable to give the applicant relief in whole against the restriction order made against him.

1 Judgment of Ms. Justice Laffoy delivered on the 11th day of February, 1999

2 This is the Applicant's application for an Order pursuant to Section 152 of the Companies Act, 1990(the Act of 1990) that he be granted relief in full from the restrictions imposed on him by order of this Court made on 22nd January, 1998 pursuant to Section 150 of the Act of 1990.

3 The background to the application is that on 30th March, 1992 it was ordered by this Court that Ferngara Associates Limited (the Company) be wound-up by the Court and that the Respondent be appointed Liquidator for the purposes of the winding-up. In the course of the winding-up the Respondent took certain action against two of the Directors of the Company, namely, Stephen Ross (Mr. Ross) and the Applicant. First, he procured an Order from this Court that they be examined pursuant to Section 245 of the Companies Act, 1963(the Act of 1963) and such examination was carried out before the Master. Secondly, he brought proceedings against them and a number of other parties, which I will refer to as "substantive proceedings", in which he alleged that both Mr. Ross and the Applicant were party to the carrying on of the Company's business with intent to defraud the creditors of the Company and that they were both knowingly parties to the carrying on of the business of the Company in a reckless manner contrary to Section 297A of the Act of 1963 and in which he sought relief under Section 298 of the Act of 1963 for recovery of certain sums which he alleged were misappropriated by or at the behest of Mr. Ross and the Applicant. Thirdly, the Liquidator sought Orders under Section 150 of the Act of 1990 restricting both Mr. Ross and the Applicant in the manner stipulated in Section 150.

4 On 22nd January, 1998 two Orders were made by this Court in the matter by the late Shanley J.. In the first, the Respondent was given liberty to compromise the substantive proceedings in the terms in which they were subsequently compromised. In the second, the compromise was given effect too. Under the terms of the compromise the Collector General was joined as an Applicant in the substantive proceedings. It was the Revenue Commissioners who had provided the funds to prosecute the substantive proceedings. As against Mr. Ross, it was ordered that the Collector General should recover the sum of £20,000 against him on the terms specified. As against the Applicant, it was ordered that the Collector General should recover the sum of £20,000 on terms that execution should be stayed provided the said sum was paid on or before 19th March, 1998. That sum was duly paid. The second order also embodied the Court's determination on the applications under Section 150. As regards Mr. Ross, the determination of the Court was in the following terms:-

"And in respect of Stephen Ross THE COURT not being satisfied as to any of the matters specified in subsection (2)(a) of Section 150 of the Companies Act, 1990DOTH DECLARE pursuant to subsection (1) of that Section that he shall not for a period of five years from the date hereof be appointed or act in any way whether directly or indirectly as a director or secretary or be concerned or take part in the promotion or formation of any Company unless it meets the requirements set out in subsection (3) of the said Section - reserving to him his right to apply under Section 152 of the said Act".

5 Mr. Ross had not resisted the making of that declaration. As regards the Respondent, the determination was in the following terms:-

"And in respect of Gerard Robinson THE COURT not being satisfied that he acted responsibly in relation to the conduct of the affairs of the Company DOTH DECLARE pursuant to subsection (1) of Section 150 of the Companies Act, 1990that he shall not for a period of five years from the date hereof be appointed or act in any way whether directly or indirectly as a director or secretary or be concerned or take part in the promotion or formation of any Company unless it meets the requirements set out in subsection (3) of the said Section - reserving to him his right to apply under Section 152 of the said Act".

6 The significance of the terms of the determination in respect of the Applicant is that the Court, while not satisfied that he had acted responsibly in relation to the conduct of the affairs of the Company, was satisfied that he had acted honestly. It was further ordered that the operation of the order under Section 150 against the Applicant should be stayed until after 22nd July, 1998.

7 The procedural history of this application is as follows:-

8 (a) The Applicant's motion was issued on 22nd June, 1998. It was directed to and served on the solicitors for the Respondent. It was grounded on the Affidavit of the Applicant sworn on 8th June, 1998, which referred to an Affidavit sworn by the Respondent in the substantive proceedings on 10th March, 1997 and an Affidavit sworn by the Applicant in response thereto on 9th May, 1997.

9 (b) The motion was returnable for 13th July, 1998 and on that day was transferred from a Chancery list to the Examiner's Court list for hearing on 20th July, 1998, that is to say, before the stay expired. Subsection (2) of Section 152 requires an applicant for relief under that Section to give not less than 14 days notice of his intention to the liquidator of the insolvent company and subsection (3) requires the liquidator, on receipt of such notice, to forthwith notify such creditors and contributories of the company as have been notified to him or become known to him that he has received such notice. Due to an oversight, the Liquidator had not notified the creditors and the contributories of the application for relief under Section 152 and the Applicant's application was adjourned from time to time to give the Liquidator an opportunity to do so.

10 (c) Eventually, the matter was opened to the Court on behalf of the Applicant on 25th January, 1999. Proof in the form of an Affidavit sworn by a staff member of the Respondent's accountancy firm of notification of the application to 93 creditors by pre-paid...