1. On
this application, which is on notice to the Minister for Justice, the Official
Liquidator of Chipboard Products Limited (In Liquidation) (the Company) seeks
directions as to whether fees are payable in accordance with paragraph 22 of
Part III of the First Schedule to the Supreme and High Court (Fees) Order, 1989
(S.I. No. 341 of 1989) (the 1989 Order) on cash paid to the Official Liquidator
by the Receiver appointed by the Governor and Company of the Bank of Ireland
(the Bank) over assets of the Company.
2. When
the winding-up order in relation to the Company was made on 23rd July, 1984,
the Company was already in receivership, the Receiver having been appointed by
the Bank on foot of the powers contained in a debenture given by the Company to
the Bank on 13th October, 1981. During the course of the receivership, which
continued until 1991, the Receiver collected debts due to the Company and sold
land, buildings, plant and stock. Having discharged the costs and fees of the
receivership, the preferential creditors and amounts due to secured creditors,
including the Bank, the Receiver transferred to the Liquidator sums aggregating
£1,958,702, which the Receiver certified to the Official Liquidator as
representing -
3. By
virtue of paragraph 22 of Part III of the First Schedule to the 1989 Order, a
fee of £2.50 is charged in the Examiner's office -
4. In
this case the Examiner has assessed the fees due by the Official Liquidator in
respect of the accounts of the Official Liquidator for the years 1986/1991,
1991/92, 1992/93 and 1993/94, which are payable by means of impressed stamps on
the Examiner's certificate on the Official Liquidator's accounts in relation to
the foregoing periods, at £65,175. Of this sum only £25,810 remains
in issue between the Official Liquidator and the Minister for Justice. It is
common case that £15,956.42 portion of the fees assessed by the Examiner
represents the fees purportedly chargeable on sums in respect of interest and
gains earned on the maturity and sale of Exchequer bills, on which sums it is
now agreed that fees are not chargeable under paragraph 22 in consequence of
two decisions of this Court: the decision of Murphy J. in
In
the Matter of Private Motorists Provident Society Limited (In Liquidation) and
In the Matter of the Companies Acts, 1963 - 1983 and In the Matter of the
Industrial and Provident Societies Acts, 1893 - 1978 Between William J. Horgan,
Applicant and the Minister for Justice, Respondent
,
in which a reserved judgment was delivered on 23rd June, 1995; and a decision
of Costello J., as he then was, in
In
the Matter of Hibernian Transport Companies Limited
,
in which judgment was delivered on 4th July, 1995. £23,409 portion of
the fees assessed by the Examiner has already been paid, this portion
representing the fees payable on the agreed sum payable to the Minister for
Finance in consequence of an order of this Court made on 20th October, 1994 to
the effect that the Minister for Finance was entitled to be subrogated to the
fixed charge on book debts in the Bank's debenture, which fees were paid by the
direction of the Minister for Finance, who accepted 97.5% of the agreed sum due
to him in full satisfaction of his claim.
5. The
issue of principle which arises for consideration here is whether the monies
received by the Official Liquidator from the Receiver, other than the monies
which represented interest and gains earned on the maturity and sale of
Exchequer bills, were
"monies
received by the Liquidator in the realisation of the assets of the Company"
within the meaning of paragraph 22.
6. Paragraph
22 has been considered by this Court previously on two occasions: by Murphy J.
in his judgment in
In
the Matter of Private Motorists Provident Society Limited (In Liquidation)
referred to above and by Costello J., as he then was, in
In
the Matter of Hibernian Transport Companies Limited
referred to above.
7. In
his judgment Murphy J. stated that he did not accept that the word
"realisation"
as used in paragraph 22 necessarily involves the sale of assets nor is the
converse true. He went on to deal with the role of an Official Liquidator in
the following passage:-
8. Murphy
J. then went on the deal with thirteen categories of receipts which were in
issue in that case. One of the categories he was concerned with is
particularly pertinent to the issue which arises here and appropos of that
category he stated as follows:-
9. It
was submitted on behalf of the Official Liquidator that in this matter, there
having been a mere transfer of monies by the Receiver to the Official
Liquidator, the receipt and taking possession of the monies by the Official
Liquidator did not constitute the receipt of monies
"in
realisation of the assets of the company"
within the meaning of paragraph 22. The word
"realisation"
in its ordinary meaning means turning a non-money asset into money.
Realisation, as distinct from receipt, requires something active on the part of
the Liquidator, not merely passivity. Moreover, the context in which the word
"realisation"
is used in paragraph 22, it was argued, evinces an intention to distinguish
between receipt, on the one hand, and realisation, on the other hand: a charge
arises under paragraph 22 only in the case of a receipt
"in
realisation of the assets of the company".
It was also submitted on behalf of the Official Liquidator that in construing
paragraph 22 it is instructive to contrast that paragraph with the
corresponding provision of the Supreme Court and High Court (Fees) Order, 1984
(S.I. No. 19 of 1984), paragraph 34 of Part III of the First Schedule of which
provided that a fee was chargeable at the rate of £2 for every £100
of the amount received
"on
taking account of monies received by a person liable to account for same".
It is true that with the introduction of the provision of the 1986 Order,
which was in identical terms to paragraph 22, fees chargeable on the Examiner's
certificate on the accounts of an Official Liquidator became chargeable on an
entirely different, and considerably reduced, basis. Thenceforth, the Official
Liquidator was to be
"chargeable
in respect of monies received ...... in realisation of the assets of the company"
,
whereas hitherto he had been chargeable in respect of
"the
amount received"
.
This fact is clearly recognised in the judgment of Costello J., as he then
was, in
In
the Matter
of
Hibernian Transport Companies Limited
.
Its practical implications are clearly discernible in the judgment of Murphy
J. in
In
the Matter of Private Motorists Provident
Society
Limited
,
where various categories of amounts received by the Official Liquidator were
held not to constitute monies received by him
"in
realisation of the assets of the company"
,
for instance, a Value Added Tax refund representing the reversal of a liability
created during the course of the liquidation and a rebate of statutory
redundancy paid by the Liquidator.
10. Counsel
for the Official Liquidator was constrained to argue that as regards the
treatment by Murphy J. of receipts by the Official Liquidator in
In
the Matter of Private Motorists Provident Society Limited
from the Receiver, this matter is distinguishable on the facts. He pointed
that the judgment in
In
the Matter of Private Motorists Provident Society
Limited
indicates that the Official Liquidator of the Society had to resort to
negotiations and litigation, the entitlement of the Official Liquidator to the
monies was contested by the Receiver and would have been properly perceived by
the Official Liquidator as being wrongfully retained by the Receiver, by
contrast to the situation which arose in this matter, where the Receiver
voluntarily transferred the surplus monies he held. Counsel for the Minister
for Justice responded that the degree to which an Official Liquidator has to
pressurise a Receiver to get in proceeds of assets of the company which the
Receiver is not entitled to retain should not be the determinant as to whether
monies are received by the Liquidator
"in
realisation of the assets of the company
".
11. In
my view, the receipts by the Official Liquidator from the Receiver appointed by
the Bank in this matter are not materially distinguishable from the receipts by
the Official Liquidator of the Private Motorists Provident Society Limited from
the Receiver of that Society. I respectfully agree with Murphy J's analysis of
the role of an Official Liquidator under the Companies code and what
constitutes a
"realisation"
of the assets of the Company within the meaning of paragraph 22. Although the
Receiver appointed by the Bank, in pursuance of the powers conferred on him by
the debenture under which he was appointed, collected in property charged by
that debenture, including book debts and other assets, and converted the
property into money, so that in complying with his statutory duty to collect
the assets of the Company so as to render them available for application in
discharge of its liabilities the Official Liquidator had to do no more than
receive cheques from the Receiver and lodge them to the Liquidator's account,
nonetheless, in my view, the monies represented by those cheques were received
by the Official Liquidator
"in
realisation of the assets of the company"
.
12. Accordingly,
there will be a declaration that pursuant to paragraph 22 fees are payable to
the Minister for Justice on cash paid to the Official Liquidator of the Company
by the Receiver appointed by the Bank over the assets of the Company, other
than money which represents interest and gains earned on the maturity and sale
of Exchequer bills.