The Revenue Commissioners v Taite

• Jurisdiction: Ireland
• Judge: Mr. Justice Tony O'Connor
• Judgment Date: 09 November 2016
• Neutral Citation: [2016] IEHC 640
• Docket Number: [Record No. 2015\62 COS]
• Court: High Court
• Date: 09 November 2016

[2016] IEHC 640

THE HIGH COURT

O'Connor Tony J.

[Record No. 2015\62 COS]

IN THE MATTER OF

A-WEAR LIMITED (IN RECEIVERSHIP)

AND

IN THE MATTER OF SECTION 316 OF THE COMPANIES ACTS

1963 – 2012

BETWEEN

THE REVENUE COMMISSIONERS

APPLICANTS

AND

DECLAN TAITE

RESPONDENT

Company – S.316 of the Companies Act 1963-2012 – Allocation of receivership costs – Unfair rule – Mode of apportionment – Fixed v Floating assets

Facts: The applicants sought an order to the effect of apportionment of remuneration and costs of receivership on the basis of work actually done in relation to the fixed and floating charges and prevention of apportionment of any costs incurred by the previous receiver in the realisation of the fixed charged assets. The respondent asserted that the onus rested upon the applicants to prove that they were prejudiced by the rule followed for such apportionment.

Mr. Justice Tony O'Connor granted the relief sought by the applicants. The Court held that the costs of the work undertaken by the applicants after the quick sale of the Company's stock in selling, categorising and managing fixed assets should not be attributed to the beneficiaries of the floating charged assets. The Court observed that the applicants were entitled to raise the issues as they were unfairly prejudiced by the decision of the respondent.

JUDGMENT of Mr. Justice Tony O'Connor delivered on the 9th day of November, 2016

Introduction

1 This further application by the applicants for directions as a creditor of A-Wear Limited (‘ the Company’) concerning the allocation of receivership costs under s. 316 of the Companies Act 1963 (as amended by s. 172 of the Companies (Amendment) Act 1990) [the provisions of which were re-enacted by s. 438 of the Companies Act 2014] was heard on 25th October 2016.

2 The Notice of Motion issued on 10th February 2015, giving rise to this judgment, also contained an application for the directions which were declined in the judgment given by this Court on 18th March, 2016 ([2016] IEHC 141). The parties had agreed prior to the hearing of that application to re-categorize Category A described as ‘Balance at date of appointment €59,381.66’ as a floating charge asset and this was mentioned at para. 29 of that judgment.

3 The basis of the current application is that the respondent Receiver and his predecessor applied, according to the applicants, an unfair rule to the apportionment of the costs and outlays (including legal expenses) to those who asserted rights to the floating charged assets and the fixed charged assets. In other words, no account was taken of the small amount of work undertaken to categorise, realise, and distribute the proceeds of the floating assets with which the applicants are now only concerned. It was submitted that the vast majority of the work the since the appointment of the respondent's predecessor in 2012 concerned the fixed assets of the Company.

4 The directions now sought and which are the subject of this judgment seek to require the respondent to:-

(iii) ‘Apportion the remuneration and costs, including the legal costs of the receivership to date, including the work and costs of the first Receiver between fixed and floating charges on the basis of the work actually done in respect of each category of assets’; and

(iv) Prevent the apportionment of any costs incurred by the first Receiver ‘in respect of the dispute’…‘over the categorisation of costs in the realisation...