Sutton Castle Developments Ltd v Companies Act

• Jurisdiction: Ireland
• Judge: Mr. Justice Tony O'Connor
• Judgment Date: 13 November 2019
• Neutral Citation: [2019] IEHC 769
• Docket Number: [2018 No. 443 COS]
• Court: High Court
• Date: 13 November 2019

[2019] IEHC 769

THE HIGH COURT

Tony O'Connor

[2018 No. 443 COS]

IN THE MATTER OF SUTTON CASTLE DEVELOPMENTS LIMITED (IN LIQUIDATION) AND IN THE MATTER OF AN APPLICATION BY TERENCE HORGAN AND ANN HORGAN UNDER SECTION 631 OF THE COMPANIES ACT 2014

BETWEEN

TERENCE HORGAN & ANN HORGAN

APPLICANTS

AND

SUTTON CASTLE DEVELOPMENTS LIMITED

RESPONDENT

Further investigation – Liquidator – Directions – Applicants seeking directions as to any further investigation and analysis required to be performed by the liquidator of the respondent in determining the circumstances of the support given to the respondent and of the withdrawal of said support leading to the company’s winding up pursuant to s. 631 of the Companies Act 2014 – Whether the liquidator had acted unreasonably

Facts: The applicants, Mr and Ms Horgan, applied to the High Court seeking “directions as to any further investigation and analysis required to be performed by” Mr Butler (the liquidator) of the respondent, Sutton Castle Developments Ltd (the company) “in determining the circumstances of the support given by MKN Investments Ltd and [Mr] McKeon to the company and of the withdrawal of said support leading to the company’s winding up” pursuant to s. 631 of the Companies Act 2014. Counsel for the applicants submitted that: (i) the ex tempore judgment of McDonald J in Re Chambury Investments Company Ltd (in voluntary liquidation) [2018] IEHC 633 recognised at para. 64 the remedy and protection afforded to creditors by this type of application for directions under s. 631 when those creditors may not have had their preferred liquidator appointed; (ii) the dictum of Finlay Geoghegan J in Re Custom House Capital Ltd (in liquidation) [2012] IEHC 382 which at para. 421 mentioned that the demands on liquidators depends on the nature of the activities of the company prior to liquidation. Counsel urged the Court to have regard to the suspicious circumstances of support and termination of support by MKN for the company which had common members.

Held by O’Connor J that the applicants had not satisfied the court that the liquidator had acted utterly unreasonably. O’Connor J noted that the only evidence available to the court regarding the applicants’ position was contained in the three affidavits sworn by their solicitor. O’Connor J held that impugning the integrity or decision-making of a liquidator by way of seeking directions requires much more than the description of allegedly suspicious circumstances. O’Connor J noted that the applicants did not contest the appointment of the liquidator and had not sought for him to be replaced. O’Connor J held that there was no evidence or suggestion that the liquidator had acted in any way unprofessionally, without integrity or irresponsibly. O’Connor J noted that the applicants through their solicitors availed of the opportunity to convey their concerns to the Office of the Director of Corporate Enforcement and they limited their engagement with the committee of inspection.

O’Connor J held that the applicants had not met the threshold required for the court to direct further investigations and analysis by the liquidator concerning the support given by MKN and Mr McKeon to the company; this applied equally to the withdrawal of the support.

Application dismissed.

JUDGMENT of Mr. Justice Tony O'Connor delivered on the 13th day of November, 2019

Introduction

1 When this application was opened last Thursday, counsel for the applicant confined it to seeking “directions as to any further investigation and analysis required to be performed by” James Butler (“the liquidator”) of Sutton Castle Developments Limited (“the company”) “in determining the circumstances of the support given by MKN Investments Limited [“MKN”] and Sean McKeon to the company and of the withdrawal of said support leading to the company's winding up” pursuant to s. 631 of the Companies Act 2014 (“2014 Act”).

Background

2 The applicants had purchased an apartment from the company in 2006. The company sold the property immediately above the applicants' apartment in 2007 which “gave rise to considerable noise pollution and inconvenience.” Those parties proceeded to arbitration leading to an arbitral award on 16th October, 2015, (“the arbitral award”).

3 On 25th November, 2015, a statutory demand was served on the company to recover the arbitral award in favour of the applicants in the sum of €100,987.00, plus costs, for the effect of the noise pollution on their home. A petition to wind up the company on behalf of the applicants followed with newspaper notices published on 14th and 15th January, 2016. However, on the evening of 14th January, 2016, a notice of a creditors' meeting for 25th January was served on the solicitors for the applicants. The liquidator was duly appointed at that creditors' meeting which was attended by representatives for MKN.

4 The solicitors for the applicant engaged with the Office of the Director of Corporate Enforcement (“ODCE”) and sought unsuccessfully inter alia a copy of the report of the liquidator to the ODCE pursuant to s. 682 of the 2014 Act. Counsel for the applicants characterised...