Tucon Process Installations Ltd (in voluntary liquidation) v Governor and Company of the Bank of Ireland

• Jurisdiction: Ireland
• Judge: Mr. Justice Tony Hunt,
• Judgment Date: 01 May 2015
• Neutral Citation: [2015] IEHC 312
• Court: High Court
• Date: 01 May 2015

[2015] IEHC 312

THE HIGH COURT

No. 390 COS/2014

Tucon Process Installations Ltd (in voluntary installation) v Bank of Ireland

IN THE MATTER OF TUCON PROCESS INSTALLATIONS LIMITED (IN VOLUNTARY LIQUIDATION)

AND IN THE MATTER OF THE COMPANIES ACTS 1963 -2012

AND IN THE MATTER OF SECTION 280 OF THE COMPANIES ACTS 1963

AND IN THE MATTER OF SECTION 139 OF THE COMPANIES ACT 1990

Between/

Tucon Process Installations Ltd (In Voluntary Liquidation)

Applicant

-and-

The Governor and Company of the Bank of Ireland

Respondent

Insolvency – S. 280 of the Companies Acts 1963 – S. 139 of the Companies Act 1990

Facts: The applicant sought a declaration regarding certain amount of money being the property of the creditors of the applicant received by the respondent. The respondent contended that the applicant was barred under s. 280 of the Companies Act from being able to bring the application in its own name.

Mr. Justice Tony Hunt dismissed the application of the applicant. The Court held that the application would not be maintainable as s. 139 of the Companies Act 1990 and s. 280 of the Companies Act 1963 clearly mentioned that the application could be brought by a liquidator, creditor or contributory of a company. The Court held that where the proceedings were for the benefit of the company, it should be brought by a liquidator rather than the company itself. The Court held that s. 139 had no application in the case as it talked about return of assets of the company that were improperly transferred. The Court held that the payments received by the respondent for the benefit of the creditors and employees of the company would be out of the ambit of s. 139 unless there was wrongful diversion or the misapplication of the funds.

1 Judgment of Mr. Justice Tony Hunt, delivered on 1 May 2015.

Pleadings

2 The Notice of Motion in this case was issued in the name of the applicant company on 15 August 2014, seeking a declaration that three individual sums totalling €23,894.50 are the property of the creditors of the applicant.

Facts

3 The affidavit grounding the application was sworn by Anthony J. Fitzpatrick, Chartered Accountant and Insolvency Practitioner, who was appointed liquidator to the applicant at a creditors meeting held on 4 May 2012.

4 The applicant operated a current bank account at the branch of the respondent at O'Connell Street, Limerick, bearing the account number 76884770.

5 The special resolution leading to the creditors meeting and the appointment of Mr Fitzpatrick was passed at a meeting of the directors of the applicant on 20 April 2012. On this date, the applicant's current account was overdrawn in the sum of €40,400.78.

6 It is alleged that on 23 April 2012, the respondent was informed by a former director of the applicant, Mr James Duffy, of the intention to place the applicant into voluntary liquidation by the holding of a creditors meeting as aforesaid.

7 Between this date and the subsequent holding of a creditors meeting, various debtors of the applicant made electronic payments to the applicant's current account, comprised of €1,947 on 25 April 2012, €3,769 on 27 April 2012 and €18,178.50 on 30 April 2012.

8 After his appointment, Mr Fitzpatrick sought the return of any funds received by the respondent on behalf of the applicant after 23 April 2012, on the basis that such sums had been received by the respondent after the date of the resolution passed by the directors to wind up the company by means of a creditors voluntary liquidation.

9 The respondent replied by the affidavit of Nigel Larke, Business Manager at the material time at the Limerick branch. By this affidavit, the respondent challenged the right of the applicant to bring this application; on the basis that standing properly belongs only to the liquidator or a creditor or contributory of the applicant. The respondent also referred to Circuit Court proceedings issued by the applicant against the respondent in the Dublin Circuit Court seeking payment of the combined sum the subject matter of this application. A Notice of Discontinuance was served in these proceedings in September 2014.

10 Mr. Larke confirmed that Mr. Duffy had advised the respondent on 23 April 2012 that the applicant was to be placed in voluntary liquidation, and of the holding of the creditors meeting on 4 May 2012, as advertised in two newspapers on 21 April 2012.

11 He also confirmed that Mr Fitzpatrick requested the respondent by letter dated 4 May 2012 to rule off all accounts held by the applicant with the respondent, and by the said letter advised as follows:-

"Please note that with immediate effect any credit transfers received by the bank must be held in trust for the liquidator."

12 Mr. Larke stated that the respondent complied with this direction after the date thereof. He asserted that the three sums lodged automatically by way of electronic funds transfer by third parties to the applicant's account prior to this date were made lawfully and in the normal course of business prior to the liquidation of the applicant. Consequently, the receipt of these payments did not have the effect of perpetrating a fraud on the applicant or its creditors or members.

13 The application was heard on the 20 ^th and 21 ^st of January and 10 February 2015. Mr. Ronnie Hudson appeared for the applicant. Mr. Denis McDonald SC appeared for the respondent (with Ms. Elizabeth Donovan).

Standing

14 The first issue to be determined is the capacity of the company to bring this application. The specific sections of the 1963 Act invoked by the heading of the Notice of Motion are sections 139 and 280. Each of these sections specifically refers to "....the application of a liquidator, creditor or contributory of a company...."

15 Before deciding the issue, it must be noted that the applicant specifically declined a proposal by the respondent during the proceedings that the company should be substituted by the liquidator for the purposes of determining the merits of the application made herein.

16 In the case of an application brought pursuant to a statutory provision, regard must be had to the plain and ordinary meaning of the words of the statute in determining questions such as standing. The nomination of specific parties as potential applicants expressly precludes such statutory applications being brought by a party other than those specified by the legislature, otherwise the precise words used to legislate for classes of applicant would be deprived of ordinary meaning. As the company is not specified by either statutory provision as being an appropriate applicant, it has no standing to seek relief under either of the statutory provisions invoked in this application.

17 This interpretation of the sections in question also has the benefit of being in keeping with the general principle that in company law matters, where proceedings are being taken for the benefit of the company, rather than by an individual creditor or contributory, the liquidator should be named as the applicant rather than the company itself. In those circumstances, the liquidator will be entitled to an indemnity out of the assets in the winding up, unless he has acted improperly.

18 A somewhat similar situation arose on the facts of the case of Southern Mineral Oil Ltd. (in liquidation) v. Cooney [1997] 3 I.R. 549. In that case, proceedings under s.297(1) of the 1963 Act were brought in the name of two companies which had no assets. Lynch J. reviewed various provisions of the Companies Acts with identical wording to those under consideration in this case, and noted as follows:-

"None of these statutes provide that the application may be brought by the company in receivership or examinership or liquidation. They provide that the application shall be brought by the receiver or examiner or a liquidator, as the case may be, and in all cases the application may also be brought by any creditor or contributory of the company in question. Nor do the provisions of 0. 74, r.49 of the Rules of the Superior Courts lend any support to bringing the application in the name of the company in receivership, examination or liquidation."

19 The Revenue Commissioners are the real applicants in the proceedings brought against the respondents.... In these circumstances it seems to me that it is wrong that they should be enabled to shelter against liability for the respondents' costs if the respondents succeed in the substantive trial of the motion by bringing the proceedings in the name of two companies who have no assets. On my reading of ss. 297 and 298 of the Companies Act, 1963, under which these proceedings are brought, neither the Revenue Commissioners nor the liquidator is entitled to bring them in the name of the companies.

20 I would therefore dismiss the appeal but I draw attention to the probable need to apply to the High Court for a ruling as to whether or not it is necessary to join or substitute the liquidator and/or the Revenue Commissioners as applicants and if so whether or not such an order should be made in this case."

21 Keane J. agreed with the observations of Lynch J. Barron J. also agreed that the question as to whether the proceedings were properly constituted was one which would have to be determined by the High Court.

22 Although the...