Tucon Process Installations Ltd v Governor and Company of the Bank of Ireland

• Jurisdiction: Ireland
• Judge: Ms. Justice Costello
• Judgment Date: 13 July 2016
• Neutral Citation: [2016] IECA 211
• Docket Number: [2015 No. 373]
• Court: Court of Appeal (Ireland)
• Date: 13 July 2016

[2016] IECA 211

THE COURT OF APPEAL

Costello J.

[2015 No. 373]

Ryan P.

Peart J.

Costello J.

IN THE MATTER OF THE COMPANIES ACT 1963 – 2014 AND IN THE MATTER OF SECTION 139 OF THE COMPANIES ACT 1990 AND IN THE MATTER OF SECTION 280 OF THE COMPANIES ACT 1963

BETWEEN

TUCON PROCESS INSTALLATIONS LIMITED

(IN VOLUNTARY LIQUIDATION)

APPELLANT

AND

THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND

RESPONDENT

Voluntary liquidation – Locus standi – Winding up – Appellant seeking a declaration that monies in question were the property of its creditors – Whether appellant has locus standi

Facts: The appellant, Tucon Process Installations Ltd, operated a current bank account at the branch of the respondent, the Bank of Ireland, at O?Connell Street, Limerick. On 20th April, 2012, the board of the company resolved to place the company in voluntary liquidation. The resolution to wind up the company was passed at a meeting on 4th May, 2012, and one Mr Fitzpatrick was appointed liquidator of the company. The respondent ruled off the company?s bank account on 4th May, 2012, in accordance with the request of the liquidator. Between 25th and 30th April, 2012, three electronic funds transfers were made by debtors of the company to the company?s overdrawn bank account; the sum of ?1,947 was lodged to the account on 25th April, 2012, the sum of ?3,769 was lodged to the account on 27th April, 2012, and the sum of ?18,178.50 was lodged to the account on 30th April, 2012. The total effect of the lodgements was to reduce the company?s overdraft from ?40,400 to approximately ?16,000. The liquidator was of the view that the sums were properly the property of the company in liquidation as the retention of the monies by the respondent in reduction of the company?s overdraft had the effect of preferring the respondent over the other creditors of the company. On 22nd November, 2012, he issued an equity civil bill against the respondent in his capacity as liquidator of the?company for and on behalf of the company. He sought a declaration that the sum of ?23,894.50 was the property of the liquidator in his capacity as liquidator of the company and an order that the sum be lodged to his account together with damages and interest and costs. These proceedings were discontinued as proceedings brought by a voluntary liquidator in the name and on behalf of a company are required to be brought in the High Court. The appellant instituted proceedings by way of an originating notice of motion dated 13th October, 2014, seeking a declaration that the monies in question were the property of the creditors of the appellant and directions pursuant to s. 280 of the Companies Act 1990 as to how to secure the return of the sum to the liquidator of the appellant for the benefit of the creditors of the liquidation. In the alternative, an order was sought pursuant to s. 139 of the 1990 Act directing the respondent to pay over the sum to the liquidator forthwith. Directions pursuant to s. 280 of the Companies Act 1963 were also sought as to whether additional proceedings were necessary to recover the monies. The respondent defended the proceedings on two bases. Firstly, it argued that the appellant had no locus standi?to bring proceedings pursuant to s. 139. Secondly, it argued that no order ought to be made pursuant to s. 139 as there was no disposal of company property such as to perpetrate a fraud on the company or its creditors or its members. In the High Court, Hunt J held that the appellant did not have locus standi to maintain the proceedings and he rejected the application based upon s. 139. The appellant appealed to the Court of Appeal against that decision.

Held by Costello J that, following Southern Mineral Oil Ltd (In Liquidation) v Cooney?[1997] 3 IR 549, where the legislature has taken the trouble to specify the parties who may bring an application under s. 139 it is not open to this Court to extend locus standi to a party upon whom it has not been conferred by the express words of the statute. Costello J held that s. 218 does not apply to voluntary liquidations and that even if s. 218 could be applied, it is confined to payments made after the commencement of the winding up.

Costello J held that the appeal should be dismissed.

Appeal dismissed.

JUDGMENT of Ms. Justice Costello delivered on 13th July, 2016

1 The first issue arising in this appeal is the issue of the locus standi of the appellant to maintain the proceedings. The second issue concerns whether or not electronic payments into the company's overdrawn bank account by third parties prior to the commencement of the voluntary winding up of the company ought to be returned to the company pursuant to the provisions of s. 139 of the Companies Act 1990.

Factual background

2 The company operated a current bank account at the branch of the respondent at O'Connell Street, Limerick. On 20th April, 2012, the board of the company resolved to place the company in voluntary liquidation and on 21st April, 2012, it advertised that a meeting of the creditors of the company was to be held on 4th May, 2012. It was common case that on 23rd April, 2012, the respondent was aware of the fact that the company intended going into voluntary liquidation as of 4th May, 2012.

3 The resolution to wind up the company was passed at the meeting on 4th May, 2012, and Mr. Anthony Fitzpatrick was appointed liquidator of the company. The respondent ruled off the company's bank account on 4th May, 2012, in accordance with the request of the liquidator.

4 Between 25th and 30th April, 2012, three electronic funds transfers were made by debtors of the company to the company's overdrawn bank account – the sum of ?1,947 was lodged to the account by way of electronic funds transfer on 25th April, 2012, the sum of ?3,769 was lodged to the account by way of electronic funds transfer on 27th April, 2012, and the sum of ?18,178.50 was lodged by way of electronic funds transfer to the account on 30th April, 2012. The total effect of the lodgements was to reduce the company's overdraft from ?40,400 to approximately ?16,000.

5 The liquidator was of the view that the sums were properly the property of the company in liquidation as the retention of the monies by the respondent in reduction of the company's overdraft had the effect of preferring the respondent over the other creditors of the company. On 22nd November, 2012, he issued an equity civil bill against the respondent in his capacity as liquidator of the company ?for and on behalf of the Company (in voluntary liquidation).? He sought a declaration that the sum of ?23,894.50 was the property of the liquidator in his capacity as liquidator of the company and an order that the sum be lodged to his account together with damages and interest and costs. These proceedings were discontinued as proceedings brought by a voluntary liquidator in the name and on behalf of a company are required to be brought in the High Court.

6 The appellant instituted these proceedings by way of an originating notice of motion dated 13th October, 2014, seeking a declaration that the monies in question were the property of the creditors of the appellant and directions pursuant to s. 280 of the Companies Act 1990 as to how to secure the return of the sum to the liquidator of the appellant for the benefit of the creditors of the liquidation. In the alternative, an order was sought pursuant to s. 139 of the Companies Act 1990 directing the respondent to pay over the sum to the liquidator forthwith. Directions pursuant to s. 280 of the Companies Act 1963 were also sought as to whether additional proceedings were necessary to recover the monies.

7 The respondent defended the proceedings on two bases. Firstly, it argued that the appellant, the company in voluntary liquidation, had no locus standi to bring proceedings pursuant to s. 139 of the Companies Act 1990. Secondly, it argued that no order ought to be made pursuant to s. 139 as there was no disposal of company property such as to perpetrate a fraud on the company or its creditors or its members.

The relevant statutory provisions

8 The principal relief sought in these proceedings is an order pursuant to s. 139 of the Companies Act 1990. This provides:-

?(1) Where, on the application of a liquidator, creditor or contributory of a company which is being wound up, it can be shown to the satisfaction of the court that?

(a) any property of the company of any kind whatsoever was disposed of either by way of conveyance, transfer, mortgage, security, loan, or in any way whatsoever whether by act or omission, direct or indirect, and

(b) the effect of such disposal was to perpetrate a fraud on the company, its creditors or members,

the court may, if it deems it just and equitable to do so, order any person who appears to have the use, control or possession of such property or the proceeds of the sale or development thereof to deliver it or pay a sum in respect of it to the liquidator on such terms or conditions as the court sees fit.

(2) Subsection (1) shall not apply to any conveyance, mortgage, delivery of goods, payment, execution or other act relating to property made or done by or against a company to which section 286 (1) of the Principal Act applies.

(3) In deciding whether it is just and equitable to make an order under this section, the court shall have regard to the rights of persons who have bona fide and for value acquired an interest in the property the subject of the application.?

The appellant also seeks directions pursuant to s. 280 of the Companies Act 1963 which provides as follows:-

?280.?(1) The liquidator or any contributory or creditor may apply to the court to determine any question arising in the winding up of a company, or to exercise in relation to the enforcing...