Star Elms Frames Ltd & Companies Acts
| Jurisdiction | Ireland |
| Judge | Ms. Justice Faherty |
| Judgment Date | 26 April 2017 |
| Neutral Citation | [2017] IEHC 376 |
| Docket Number | [2016 No. 242 COS] |
| Court | High Court |
| Date | 26 April 2017 |
IN THE MATTER OF STAR ELM FRAMES LIMITED (IN LIQUIDATION) AND IN THE MATTER OF THE COMPANIES ACT 2014
[2017] IEHC 376
[2016 No. 242 COS]
THE HIGH COURT
Company – The Companies Act 2014 – Creditor's winding up – Request of records by new liquidator – Contempt of court by previous liquidator – Locus standi
Facts: The new liquidator of the company (under liquidation) sought an order under s. 596 of the Companies Act 2014 for directing the previous liquidator to comply with the earlier order of the Court that required him to transfer control of all books and records of the company to the new liquidator. The previous liquidator had challenged the locus standi of the new liquidator to maintain the present application. The previous liquidator contended that he had transferred the required documents but on a later date. The previous liquidator also objected to the mode of service of the court order, as there was no personal service to him. The new liquidator averred that the previous liquidator was guilty of contempt of court; and the question of historical contempt should be determined by the court.
Ms. Justice Faherty directed that the previous liquidator must comply with the provisions of s. 644(2)(b)(i) of the 2014 Act so that the functions of the new liquidator could run smoothly irrespective of the fact that the previous liquidator had already transferred all the relevant documents. The Court held that s. 644(2)(b)(i) expressly mandated the former liquidator to deliver up his books and records upon the appointment of the new liquidator and the new liquidator had the power to apply to the court if that delivery had not taken place. The Court observed that the solicitor of the previous liquidator had received the copy of the court order with penal endorsement and that was sufficient service for the purposes of o.41, r.8 of the Rules of the Superior Courts 1986. The Court found that the previous liquidator committed a historical breach of the court order; however, the court regarded it as a limited breach and decided not to impose any fine on the previous liquidator as he had complied with the court order, albeit on a date later than that set by that order.
This matter comes before the court by way of Notice of Motion grounded on the affidavit of Myles Kirby of Ferris and Associates, who was appointed official liquidator of Star Elm Frames Limited (‘the Company’) by order of the High Court (Humphreys J.) dated 10th August, 2016.
The relevant background leading to the appointment of Mr. Kirby is as follows: On 24th June, 2016, the Revenue Commissioners presented a petition in the High Court seeking to have the Company wound up. The petition was given a return date of 18th July, 2016. The petition was presented following service by the Revenue Commissioners of a demand, dated 10th March, 2016, for the repayment of the total sum of €582,523.35 which the Revenue Commissioners asserted was due and owing by the Company. The members of the Company subsequently nominated Mr. Anthony J. Fitzpatrick, Chartered Accountant, practicing from Clonmoney House, Newenham Street, Limerick as liquidator of the Company in a creditors' voluntary winding up. Mr. Fitzpatrick's appointment terminated on 10th August, 2016, following the appointment of Mr. Kirby by order of the High Court.
In addition to ordering the Company to be wound up and appointing Mr. Kirby as official liquidator, it was ordered by Humphreys J. that ‘pursuant to s. 572(1)(b) of the Companies Act 2014 that Mr. Anthony Fitzpatrick present all books, records, accounts and property of the Company to Miles Kirby liquidator of the Company as soon as possible and no later than the close of business on Monday the 15th August, 2016’. On 16th August, 2016, the Company and Mr. Fitzpatrick lodged a notice of appeal against the High Court order.
The within motion issued on 30th August, 2016, under the record number for the petition to wind up the Company. The reliefs then being sought were as follows:
(1) An order pursuant to O. 44 of the Rules of the Superior Court (RSC) for the attachment of Mr. Fitzpatrick ‘in respect of the deliberate and continuing breach by him’ the order of 10th August, 2016;
(2) An order committing Mr. Fitzpatrick to prison for failing to comply with the High Court order of 10th August, 2016;
(3) Further or in the alternative, an order directing Mr. Fitzpatrick to pay a fine for the benefit of the winding up of the Company in consequence of his ‘wilful contempt’ of the High Court order;
(4) Further or in the alternative, pursuant to O. 42 RSC, an order for sequestration and for the appointment of a sequestrator for the assets of Mr. Fitzpatrick of whatever kind for the purpose of having them sequestered as a result of his wilful disobedience of the record order;
(5) Further or alternative, an order pursuant to s. 596 of the Companies Act 2014 and/or s. 644 of the said Act and/or s. 572 of the said Act and/or pursuant to the inherent jurisdiction of the court directing Mr. Fitzpatrick to take all necessary steps to immediately present and/or transfer control of all books, records, property and accounts of the Company to Mr. Kirby at his office;
(6) An order directing AIB plc. to transfer control of a bank account opened by Mr. Fitzpatrick in his capacity as voluntary liquidator of the Company to the official liquidator Mr. Kirby;
(7) An order directing that Mr. Fitzpatrick discharge:
(a) the costs of the within application; and
(b) the whole (or so much of them as the Court shall specify) of the costs and expenses incurred by the official liquidator in investigating and dealing with the matters which are the subject matter of the within application; and
(8) An order providing for a payment on account by Mr. Fitzpatrick in respect of costs and expenses as maybe awarded against him in the within application.
The within application first came before the court on 2nd September, 2016, this being the return date for the Notice of Motion which issued on 30th August, 2016. At the outset, objection was raised by counsel for Mr. Fitzpatrick on the basis Mr. Kirby did not have locus standi to bring the within application. It was argued that Mr. Kirby was not a party to the proceedings to wind up the Company. As deposed to in the affidavit of Mr. Fitzpatrick's solicitor, Mr. Kilcline, sworn 1st September, 2016, at the hearing of the petition to wind up the Company, Mr. Kirby had not sought special leave to appear pursuant to O. 74, r. 15 RSC. Reliance was also placed on the fact that at the hearing in the Court of Appeal of an application for a stay on the Order appointing Mr. Kirby official liquidator, an affidavit sworn by Mr. John Healy of Ferris and Associates was not permitted to be opened. Moreover, counsel for Mr. Fitzpatrick advised that Mr. Kirby's solicitor was not permitted to address the Court of Appeal at the hearing of the stay application, albeit that Mr. Kirby's costs for attending the hearing were allowed as he had been supplied with a copy of the appeal by Mr. Kilcline. Counsel submitted that in the context of the within proceedings, the only person who could apply to seek Mr. Fitzpatrick's attachment and committal was the petitioner in the winding up proceedings, namely the Revenue Commissioners, whose solicitor was on record in the proceedings. Counsel for Mr. Fitzpatrick emphasised that Mr. Kirby's solicitor was not a solicitor on record in the within proceedings. Accordingly, he argued there was no right of audience for Mr. Kirby in the within proceedings albeit counsel acknowledged that Mr. Kirby, as the official liquidator, could seek the reliefs sought in the Notice of Motion had he instituted his own proceedings and in the proper format.
Counsel for Mr. Kirby described Mr. Fitzpatrick's objection as entirely misconceived. He submitted that once Mr. Kirby was appointed official liquidator he was the only person entitled to act on behalf of the Company. It was submitted that where a liquidator has been appointed by order of the court it was entirely normal for applications to be brought by the liquidator which bear the same record number as the petition to wind up. Counsel contended that the Order made on 10th August, 2016 was that Mr. Fitzpatrick was to present the books and records of the Company to Mr. Kirby. In circumstances where Mr. Kirby was alleging breach of that Order, the only person who could act on foot of the alleged breach was Mr. Kirby. Counsel contended that this was borne out by the ruling of the Court of Appeal in refusing to stay the High Court Order of 10th August, 2016 (save in one discrete regard, namely the award of costs against Mr. Fitzpatrick). Counsel referred to the judgment of Ryan P. in the Court of Appeal who stated:-
‘In my view, Mr. Fitzpatrick is not entitled to retain the materials of the Company if he is not the liquidator … Mr. Kirby is entitled to get all the relevant materials if he remains liquidator.’
After hearing the submissions of both counsel, this Court was satisfied that as the official liquidator of the Company appointed by Order of the court on 10th August, 2016, Mr. Kirby was entitled to pursue the within application and I ruled accordingly.
In the course of the hearing on 2nd September, 2016, counsel for Mr. Kirby and counsel for Mr. Fitzpatrick ultimately reached a consensus (with some prompting by the court) as to how to effect delivery of the books and records of the Company to Mr. Kirby. This was without prejudice to the issues to be determined by this Court on foot of the motion brought by Mr. Kirby.
On 6th September, 2016, the court was advised that the Company's books and records had been presented...
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Myles Kirby and Others v Anthony Fitzpatrick
...5 The relevant facts by way of background can be summarised adequately by reference to paras 2 and 3 of the judgment of the trial judge [2017] IEHC 376 as follows: ‘2. The relevant background leading to the appointment of Mr Kirby is as follows: on 24 th June, 2016, the Revenue Commissioner......