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Judgment Title: Millstream Recycling Limited Neutral Citation: [2010] IEHC 538 High Court Record Number: 2009 684COS Date of Delivery: 08/11/2010 Court: High Court Composition of Court: Judgment by: Laffoy J. Status of Judgment: Approved |
Neutral Citation [2010] IEHC 538 THE HIGH COURT [2009 No. 684 COS] IN THE MATTER OF MILLSTREAM RECYCLING LIMITED IN THE MATTER OF THE COMPANIES ACTS 1963 TO 2009 AND IN THE MATTER OF AN APPLICATION BY MILLSTREAM RECYCLING LIMITED PURSUANT TO SECTION 201 OF THE COMPANIES ACT 1963
MILLSTREAM RECYCLING LIMITED APPLICANT Judgment of Miss Justice Laffoy delivered on the 8th day of November, 2010. 1. The application and its factual basis
(ii) that all proceedings brought, or contemplated, by Scheme Creditors against the company for damages in relation to claims arising out of a contamination event as defined in the Scheme be stayed pursuant to s. 201 (2) of the Act of 1963 permanently. 1.2 Section 201(3) provides:
(b) At the second meeting, that is to say, the meeting of the Scheme Creditors who are connected to the Company through common shareholders (the connected Scheme Creditors), the Scheme was unanimously approved by the two creditors (Hoggs Hogs Ltd. and Hoggs Enterprises Ltd.), whose total claims aggregate €1,384,372.61. 1.4 The largest total claim admitted and determined by the Expert is the claim of Rosderra Irish Meats Group Ltd. (Rosderra) in the sum of €19,139,505, which represents approximately 58% of the total value of the determined claims of non-connected Scheme Creditors. 2. Parties who made representations on the hearing of the petition
Staunton had been late in submitting a claim to the Scheme Manager in accordance with the timeline set out in the Scheme Proposals. Staunton’s position was set out in an affidavit of Bebhinn Murphy, a member of the firm of solicitors acting for Staunton, which was sworn on 15th July, 2010. Staunton’s position is that the Scheme should be approved but on the basis that it is entitled to participate in the distribution to be effected thereunder. (b) Vion Food Group Ltd. (Vion) Vion, in its written submission, is described as an international food company which has its headquarters in the Netherlands. No affidavit has been filed on behalf of Vion on the petition and its current solicitors, McCann Fitzgerald, appear to have become involved with the solicitors acting for the Company and the Scheme Manager on the Friday before the return date on the petition, which was 19th July, 2010. The position of Vion, which did not submit a claim under the Scheme Proposals, is that, first, the Court should not sanction the Scheme on the grounds that it is unfair, in that the Scheme Proposals lacked clarity as to who was entitled to claim under the Scheme and, secondly, there was a lack of clarity and transparency in relation to the mechanism and process for determining claims which gave rise to a real risk of unequal treatment. As Vion was not a claimant, the second argument seems to be purely theoretical as it is not directed to its particular circumstances. (c) W. & E. Fulton Ltd. (Fulton) Fulton was one of the abstaining non-connected Scheme Creditors. Three affidavits have been filed on behalf of Fulton, the first sworn by William Fulton on 15th July, 2010, a second short affidavit sworn by William Fulton on 27th July, 2010, and an affidavit sworn on 27th July, 2010 by Michael Murphy, a retired solicitor having practised in the jurisdiction of England and Wales, who has advised Fulton. I consider that Mr. Murphy’s affidavit contains more hearsay and material of a speculative nature than fact. In his first affidavit, Mr. Fulton averred as follows: “I wish to stress at this point in time that I’m not challenging the Scheme per se. I am merely seeking information so that I can be satisfied that the payment to all the creditors are just and equitable and in anticipation with the Scheme as envisaged by this Honourable Court. Accordingly I beg this Honourable Court to defer making any decisions in connection with whether or not the Scheme should be sanctioned at this stage until the transparency and applicability of the Rosderra claim can be established. The position adopted by Fulton at the hearing of the petition distilled from comprehensive submissions made on its behalf involved two alternative propositions, the bases on which they were advanced overlapping to an extent, namely: (1) Subject to the quashing of the decision to admit Rosderra as a non-connected Scheme Creditor, the Scheme should be sanctioned with the distributions to the remaining Scheme Creditors being increased pro rata. The basis on which it was contended that Rosderra should be excluded was that the Scheme, when properly construed and considered in the context of the affidavit evidence, does not admit claimants in the position of Rosderra as Scheme Creditors. It was specifically contended that the Scheme contained no mechanism or process for determining whether a claimant in the position of Rosderra came within the definition of Scheme Creditor and that the Scheme did not assign that role to the Expert. (2) Alternatively, if, by reason of lack of jurisdiction or otherwise, the Court is unable to exclude Rosderra, the Scheme should not be sanctioned. The basis on which the Court was urged to refuse to sanction the Scheme was that it would be unfair and inequitable to do so for a variety of reasons, but primarily because, it was contended, the role of the Expert and the manner in which he performed it should be subject to review by the Court. The consequence if it is not, or cannot be, reviewed by the Court, it was contended, is that Fulton is being treated unfairly by the combination of the exclusion of its Foyle Meats Ltd. claim referred to later and the inclusion of the Rosderra claim. (d) D. C. Cattle Ltd. (D.C. Cattle) D. C. Cattle was another abstaining non-connected Scheme Creditor. D.C. Cattle adopted a similar position to that adopted by Fulton, in that it was submitted that the Court should scrutinise the claim of Rosderra and, if it did, it was urged that it could not be satisfied that the operation and implementation of the Scheme was fair and equitable, that the Scheme Creditors at the first meeting were properly informed, or that they came to an objective and reasonable conclusion on the Scheme. On that basis, it was submitted that the claim of Rosderra should be disallowed and the distribution be effected in relation to the remainder of the Scheme Creditors. The position of D.C. Cattle was confirmed by the affidavit of Damien Conlon sworn on 16th July, 2010, which contained more advocacy than factual material. (e) Rosderra No affidavit has been filed in support of Rosderra’s position, although some correspondence which passed between the solicitors for Rosderra, Eugene F. Collins, and the Company’s solicitors has been exhibited in the affidavits filed on behalf of the Company. The position of Rosderra, which was described in its written submission as “the largest pig processor on the Island of Ireland” and the largest contamination creditor of the Company, was that the Court should give approval to the Scheme as passed by the Scheme Creditors at the meetings on 1st July, 2010. While adopting the position that Rosderra had made its claim and it had been admitted and its value determined properly in accordance with the Scheme, so that there was no good reason for the Court to interfere with its participation in the Scheme, it was submitted on behalf of Rosderra that the Court did not have jurisdiction to exclude Rosderra as had been argued on behalf of Fulton and D. C. Cattle. 3. Post-meetings undertakings 3.2 The undertakings given by the connected Scheme Creditors were given by each of them in letters dated 16th July, 2010 which were addressed to the Scheme Manager and to the Company. Each of the letters discloses that each of the connected Scheme Creditors has an outstanding claim for compensation amounting to €430,573 pending under the Department’s scheme. Each has given an undertaking to the Scheme Manager in terms similar to the Rosderra undertaking set out below. 3.3 Similarly, in a letter dated 21st July, 2010 to the Scheme Manager and to the company, Rosderra has given an undertaking, although it has not disclosed in the letter the amount of its outstanding claim to the Department. 3.4 It is convenient to set out the terms of the undertaking by reference to the letter from Rosderra. It is in the following terms:
4. The general legal principles in relation to the application of s. 201(3)
4.2 The editors of McCann and Courtney also note that, in sanctioning a scheme, the Court may impose such conditions or modifications as it thinks fit in order to ensure that the arrangement or compromise is fair and equitable. As authority for that proposition they recite the decision of the Court of Appeal in Re Canning Jarrah Timber Co. (Western Australia) Ltd. [1900] 1 Ch 708. However, it was submitted by counsel for Rosderra that that proposition is not borne out by reference to the decision in the Canning Jarrah case. 4.3 Although the factual basis of the Canning Jarrah case is far removed from the factual basis of this application, it is appropriate to consider it in some detail, as it is the only authority to which the Court has been referred in relation to the Court’s jurisdiction to modify a scheme. As the head note discloses, the company had passed special resolutions for voluntary winding up and the adoption of a scheme of arrangement with the debenture holders and the scheme had been assented to by the statutory majority of debenture holders, as provided in the Joint Stock Companies Arrangement Act 1870. The scheme provided, inter alia, that a new company would be formed and that the liquidator should enter into an agreement with that company for the transfer to it of the undertaking and assets of the old company; that the new company should issue debenture stock to the debenture holders of the old company in satisfaction of their debentures; that every shareholder in the old company should be entitled to claim a share in the new company in respect of each share held by him in the old company; that the new company should not be bound to allot any share unless the member entitled thereto should, within three weeks from the sanction of the scheme by the Court, claim his allotment and make a specified payment on account of the liability thereon; and that as regard unclaimed shares the liquidator should use his best endeavours to sell the same, and should divide the net proceeds of sale rateably among the non-claiming members of the company. Subject to the provisions of the Scheme, the new company was to take over and discharge all the liabilities of the old company and to indemnify the old company. Among the special resolutions passed by the shareholders of the old company was one which authorised the directors and the liquidator or either of them “to procure underwriting for all or any of the capital of the new company on such terms and conditions as they or he may approve, and to pay for same out of the assets of the company”. 4.4 At first instance, Cozens-Hardy J. refused to sanction the scheme because he considered that the underwriting agreements, which had been entered into by the liquidator pursuant to the resolution, were illegal and improper. Counsel for Rosderra drew the Court’s attention to the interchanges in the Court of Appeal between the members of the Court and counsel for the liquidator and counsel for three dissentient shareholders. The Court of Appeal in a short, apparently, ex tempore judgment, sanctioned the scheme on the undertaking of the liquidator (1) to pay the unsecured creditors of the old company in full out of the assets in his hands; (2) not to act upon the resolution as to underwriting and to procure the cancellation of the underwriting agreements (in respect of which Lindley M.R. stated, at p. 717, that he agreed with Cozens-Hardy J. in thinking that the Court ought to be very careful about giving its sanction to such agreements, which involved the payment of commission out of the assets of the company); and (3) that the three dissentient shareholders of the old company who opposed the scheme should, if they elected within three days to dissent from the special resolutions passed by the company, be entitled to all statutory rights of dissentient shareholders under provisions of the Companies Act 1862. 4.5 It is obvious from reading the report in the Canning Jarrah case that Lindley M.R. exacted those undertakings from the liquidator, who was obviously in a position to give them before the decision of the Court was announced. It was submitted by counsel for Rosderra that the decision in the Canning Jarrah case illustrates no more than that the Court can confirm a scheme of arrangement with modification, but that does not mean that the Court can impose modifications without the consent of the parties who would be bound by such modifications. It was submitted that the authority does not warrant the Court interfering unless there is consent and that, without consent, there is no jurisdiction to modify the scheme; the scheme must be either sanctioned or rejected. In this case, it was the position of Rosderra that, as a matter of law, the Court could not sanction a modified scheme, which excluded Rosderra. 4.6 As regards the case made by Staunton to be included in the Scheme, counsel for Rosderra reiterated his submission that the Canning Jarrah, on which counsel for Staunton relied, only provides jurisdiction for a limited set of circumstances in which a Court can exercise its jurisdiction to modify, although he did concede that the Court might take the view that it is open to it to allow for the inclusion of Staunton. It was indicated that Rosderra had no objection, if the Court were to take that position. 4.7 Counsel for Rosderra supported his submission that the Court has no jurisdiction to modify the Scheme by excluding Rosderra, by referring the Court to s. 24 of the Companies (Amendment) Act 1990, which deals with confirmation of proposals in an examinership, and, in particular, subs. (3) of which provides that, at the hearing of the Court at which the report of the examiner is considered, the Court may, as it thinks proper, subject to the provisions of s. 24 and s. 25, “confirm, confirm subject to modifications, or refuse to confirm the proposals”. 4.8 As regards sanctioning a scheme under s. 201(3) on the basis of undertakings, the Court was referred to a passage in Courtney on The Law of Private Companies (2nd Ed. at 24.045) to the following effect:
4.9 Having considered the matter, I have come to the conclusion that, insofar as the Court has jurisdiction to sanction the Scheme subject to modification, it is a very limited jurisdiction. Although counsel for Rosderra opposed the proposition advanced by Fulton that Rosderra should be excluded on the basis that, inter alia, the Court does not have jurisdiction to modify the Scheme, in reality, the Fulton proposition was not that the Scheme should be modified but that the Scheme does not cover the Rosderra claim. Therefore, it is unnecessary, and it would be inappropriate, to endeavour to delimit the extent of the Court’s jurisdiction to modify a creditors’ scheme of arrangement at the Court sanction stage of the process, that is to say, on an application under s. 201(3), save to the extent that the issue will be addressed in dealing with the Staunton claim later. 4.10 However, I am satisfied that the Court has jurisdiction to sanction a scheme of arrangement subject to receiving undertakings, including undertakings from benefiting parties which are advantageous to other benefiting parties who would be bound by the scheme if it were sanctioned. 5. Application of the law to the facts: issues 5.2 The issues which remain are:
(b) the issue raised by Staunton as to its exclusion; (c) whether it is appropriate to sanction the Scheme subject to the undertakings proffered by Rosderra and the connected Scheme Creditors. 6.1 As I understand it, the factual basis of the claim of Vion is that its claim is similar to that of Rosderra. In its written submission it is stated that it has a claim against Mr. Michael Monagle (Monagle) a pig farmer who supplied Vion with pigs which had been fed with contaminated pig feed supplied by the Company. Its claim is for the sum of £7.5m (€8,346,316). In Appendix 3 to the Scheme Proposals, which were circulated to creditors in January 2010, which lists the claims summary as at 13th January, 2010, Monagle’s claim is shown as including three elements, one of which is a claim for £7,500,000. As I understand the position, the Expert did not allow that element of Monagle’s claim. Vion’s position is that it did not take any steps to submit a claim against the Company because its claim, in the first instance, was against Monagle. The legal basis of Vion’s contention that the Scheme should not be sanctioned is that it is not fair and equitable, which is founded on an attack on the provisions of the Scheme, and, in particular, the provisions which identify who is entitled to submit a claim under the Scheme and the provisions which deal with the admission and determination of the value of claims by the Expert. 6.2 The legal basis of Fulton’s contention that the Scheme should not be sanctioned if the Court cannot exclude Rosderra, is that Rosderra does not come within the definition of Scheme Creditor and its claim should not have been admitted by the Expert. The factual basis of that contention is that Rosderra did not purchase the contaminated product directly from the Company. As I understand the position, and it is anything but clear from the documentation before the Court and there is no real factual evidence in relation to it, Rosderra purchased animals from persons who had purchased contaminated product from the Company. Fulton supports its contention that Rosderra’s claim should not have been admitted on the basis that part of Fulton’s claim in the sum of £82,231, which was not admitted by the Expert, related to a third party claim against it in that sum by Foyle Meats Ltd., which had a contractual relationship with Fulton and which was affected by the meat recall order in Northern Ireland as a result of the contamination event. 6.3 In response to Fulton’s affidavit and its written submissions, the Company filed an affidavit of Robert Hogg sworn on 10th August, 2010, in which he averred that a significant number of the creditors whose claims were admitted under the Scheme had no contractual relationship with the company, or, alternatively, did not purchase product from the company, listing the relevant creditors. Without expressing any definitive view on the factual position, which would be inappropriate in the circumstances, it is pertinent to observe that it would certainly seem arguable that most of the creditors listed by Mr. Hogg conducted their business with the Company through an agent. However, in relation to one example given, McCarren, which voted against the Scheme, but is not now opposing it, it is averred that it is a pig processor and is in the same position as Rosderra, whatever it is. Those observations illustrate the real factual vacuum within which the Court is operating. 6.4 I have outlined the Scheme in my judgment of 23rd December, 2009. For present purposes, it is necessary to focus on the provisions of Clause 11 of the Scheme by reference to the schedule of definitions at the end of the Scheme. Clause 11.1 set out the purpose of the Scheme as being “to deal with all claims against the Company arising from the Contamination Event”, which expression was defined as “the discovery as Dioxins and PCBs in the Company’s animal feed”. Consistent with that provision is –
(b) the definition of “liability”, which is defined as any claim against the Company arising from the Contamination Event, and (c) the definition of “Scheme Creditors” as parties “entitled to compensation arising from the Contamination Event”. 6.6 As regards the argument made on behalf of Vion that the advertisements and notices in respect of the Scheme lacked clarity as to who was entitled to claim and, in particular, failed to make clear that parties like Vion in respect of whom an indemnity was being sought were entitled to claim directly on their own behalf, in my view, it does not stand up. The advertisements complained of, the advertisements directed by the Court in the order of 23rd December, 2009, which were published at the end of January 2010, invited claims from any “creditor” in respect of “all losses it may have sustained as a result directly or indirectly out of the supply by the Company” of contaminated products. In that context, in my view, “creditor” would be understood by a person reading the advertisement as synonymous with claimant. The explanatory memorandum issued by the Scheme Manager and the claim forms and the notice which accompanied the claim forms, in my view, were consistent with the provisions of the Scheme. That notice, headed “Important Notice”, emphasised the distinction between claims for material loss and claims for non-material loss as defined in the Scheme by reference to the FBD insurance policy. It unambiguously placed sole responsibility on the claimant to make its own assessment as to the nature of its claim having regard to that categorisation and recommended that the claimant obtain legal advice. It also emphasised that examples given on the claim form were for guidance only and should not be taken as being definitive. The fact that Vion, apparently, concluded that it could not make a claim directly under the Scheme, in my view, cannot be attributed to lack of clarity in the Scheme and does not mean that the Scheme was unfair or inequitable. 6.7 In relation to the contention that the Expert did not have a role in determining whether a claimant came within the definition of “Scheme Creditor”, in my view, that argument is not sustainable. It is implicit, if not spelt out, in Clause 11.3 of the Scheme, and in the subsequent provisions of Clause 11, that the task of the Expert, which was to “determine both the quantum and … categorisation of the claims of the Scheme Creditors”, necessitated the Expert reaching a conclusion whether or not the claim was a claim which should be admitted for determination of value and categorisation. Clause 11.18 of the Scheme expressly provided that the value specified by the Expert might be “a zero value” in the event that he considered that insufficient information had been supplied by the Scheme Creditor (presumably, meaning claimant), inter alia, to “determine whether any Liability exists”, liability in that context meaning whether there was a claim against the Company arising from the Contamination Event. That provision clearly signals that the Expert was entitled to reject a claim, if he concluded that the claimant was not entitled to compensation arising from the Contamination Event, although the rejection was formulated as zero value. Any other interpretation of the Scheme does not make sense. 6.8 Accordingly, the categorisation process involved the Expert deciding in the first instance whether the claim was a claim against the Company arising from the Contamination Event and then determining whether it fell within or without the Products Liability Section of the insurance policy with FBD. In the schedule of definitions the Expert was identified. It is worth noting that his profession is that of loss adjustor. His role was described in the schedule of definitions as “to review, categorise and determine the value of the claims of Scheme Creditors”. It was provided that he would have the assistance, as required, of a lawyer. In the events which happened, he had the assistance of Mr. John O’Donnell, S.C. It was not the role of the Expert to determine liability in the sense in which liability would be determined by an arbitrator or by a court, addressing issues as diverse as the legal basis of the cause of action, foreseeability, remoteness of damage, causation and suchlike. His role was as an Expert evaluating and categorising claims made under a scheme of arrangement. The significance of the fact that the role was performed by a loss adjustor was that five sixths of the funds which were definitely available, the Insurance Proceeds, were to be allotted and distributed pro rata to material claims, which were defined by reference to the FBD insurance policy, whereas the remaining one sixth covered non-material claims. It is noteworthy that, although the Insurance Proceeds are to be apportioned between material and non-material claims in those shares and that the Litigation Dividend (if any) is to be distributed on a total quantification of claim basis pro rata, and it is not clear on what basis other than, presumably, commercial reality and commonsense those provisions are formulated, no party has contended that the approach adopted in the Scheme in relation to those matters is intrinsically unfair or inequitable. 6.9 I am satisfied that the process provided for in Clause 11.8 and the succeeding clauses of the Scheme by virtue of which the Expert fulfilled his task was fair and equitable and designed to ensure equality of treatment in accordance with its terms. While a relatively tight timeframe was provided for submission of claims and for dealing with requests for information from the Expert, those provisions bound all claimants. It was provided that claims would be determined by the Expert without direct input from the Company, although he was given an absolute discretion to request such information from the Company as he considered necessary in order to deal with particular claims. It was provided that just over a month before the meetings were to be held, the Expert would notify the claimant of the outcome of his evaluation if a lower value than claimed (presumably, including zero value) had been determined or if the categorisation of the claim would result in a lower dividend to the claimant than the claimant had sought. While there was no appeal against the decision of the Expert, the fact is that each claimant knew before the meetings how it would be affected by the Scheme it if were to be approved at the meetings. 6.10 Clause 11.22 of the Scheme provided that the Expert’s determination, as to both value and categorisation, was to be final and binding on both the Company and on the Scheme Creditors and was not subject to appeal in any circumstances. That provision was also reflected in Clause 11.8 and it was emphasised in the “Important Notice”, which accompanied the claim forms. However, as a general proposition, it cannot be the case that the determination of the Expert in accordance with the Scheme is wholly immune from review by the Court. The law on the position of an expert in a context which is wholly contractual was set out by this Court (Clarke J.) in O’Mahony v. O’Connor [2005] 3 IR 167 in the following passage (at p.184):
6.11 Further, there is no doubt that, in construing and applying s. 201(3), the Court must do so in a manner which is consistent with the provisions of the Constitution, as counsel for Vion submitted, referring to the decision of the Supreme Court in East Donegal Co-Operative v. Attorney General [1970] 1 I.R. 317. Similarly, the Court must construe and apply s. 201(3) in a manner compatible with the European Convention on Human Rights (Convention). In that latter context, counsel for Fulton made submissions on the provisions of Clause 11.22 having regard to the right to access to the courts protected by Article 6 of the Convention, by reference to some English authorities, including the decision at first instance in Re Hawk Insurance Company Ltd., (at p. 500) and the decision of the High Court in Re Pan Atlantic Insurance Co. Ltd. [2003] BCC 847, which was alluded to in my judgment of 23rd December, 2009. 6.12 However, in this case, it is not necessary to explore the constitutional right or the Convention right of a participant in the Scheme to have access to the Court or the scope of the jurisdiction to review the determination of the Expert further, because no factual basis has been advanced to support the contention that the determination of the Expert requires to be reviewed. As Vion did not participate in the process, it is difficult to see how it has standing to challenge the manner in which the process was conducted. Fulton has adopted an inconsistent approach in that, on the one hand, it has acknowledged that the Expert followed the process as laid down in the Scheme, save that it improperly included the claim of Rosderra, while, on the other hand, it complained about the exclusion of the Foyle Meats Ltd. claim by the Expert. However, the fundamental reason why the Court does not have to consider the scope of Clause 11.22 or its jurisdiction to review the Expert’s determination in the context of an application under s. 201(3) any further is that there is no evidence before the Court to support the contention that the Expert acted improperly in admitting the claim of Rosderra. 6.13 To illustrate that point, Rosderra’s claim was categorised as being, in part, a material claim and, in part, a non-material claim, the material component being valued at in excess of €8m. As regards that component, the test which the Expert had to apply was whether the claim by Rosderra was a claim against the Company which arose out of the Contamination Event and which fell within the Products Liability Section of the FBD policy. There is no evidence whatsoever before the Court on which one could form a view as to whether the Expert properly applied the test. Indeed, the FBD policy is not before the Court. 6.14 In summary, for the reasons I have outlined, I find that there is no basis for the contention that the Scheme is not fair or equitable or that the claims evaluation process was implemented in a manner which was unfair or inequitable. I see no basis for subverting the decision of the majority of the Scheme Creditors, who participated and whose votes exceeded the statutory threshold provided for in s. 201(3) and who, I am satisfied, acted bona fide and voluntarily, by refusing to sanction the Scheme. 7. The Staunton inclusion issue 7.2 The Scheme provided that all claims against the Company arising out of the contamination event should be submitted to the Expert in the prescribed form on or before 12th February, 2010. It was provided that Scheme Creditors who had not submitted a prescribed Creditor Claim Form by that date would be deemed to have no claim and any claims received after that date would not be enforceable. The evidence is that Staunton only learned of the Scheme Proposals on 23rd February, 2010, just eleven days after the deadline. It then submitted a claim, but it was not accepted by the Scheme Manager. On the application to Court on 23rd March, 2010, the Court held that its function under subs. (1) of s. 201 was exhausted when the order of 23rd December, 2009 was made and that it did not have jurisdiction to interfere with the implementation of the steps towards the holding of the creditors’ meetings on 1st July, 2010, which were matters which were governed by the terms of the Scheme itself. The application to intervene was refused. However, the Court made it clear that Staunton was not precluded from pursuing any issue which might be raised if the Scheme was approved and it came back to Court to be sanctioned, as has happened. 7.3 The position adopted by Staunton is that the Court should not sanction the Scheme in a manner which precludes Staunton from having its bona fide claim dealt with in accordance with the Scheme, because to do so would be fundamentally unfair and inequitable. The primary basis on which Staunton makes that contention is that the provision in the Scheme, which excludes from participation therein claims not brought by 12th February, 2010, if approved by the Court, has the effect of arbitrarily and permanently excluding Staunton from pursuing its legitimate and bona fide claim against the company, because it will not be able to participate in the Scheme and the permanent stay on proceedings against the Company will prevent it having access to the Court. The submission that the cut-off date of 12th February, 2010 was arbitrary is based on the contention that the cut-off point for bringing claims in the prescribed form was unfairly tight, particularly for claimants like Staunton, which did not have a contractual relationship with the Company, while, on the other hand, the timeline within which the Expert had to determine the value and categorisation of the claims and within which the scheme manager prepared for the creditors’ meetings was ample to allow Staunton’s claim to be accepted, even though out of time. In essence, what Staunton want is that the Scheme should only be approved of on the basis of an undertaking by the Company that its claim will be dealt with under the Scheme. 7.4 With a considerable degree of prescience, the value of the claim of Staunton was determined by the Expert on the same basis as other Scheme Creditors’ claims under the Scheme, on a without prejudice basis. The Expert put a total value of €329,868, made up of a material loss claim of €27,921 and a non-material loss claim of €301,947, on Staunton’s claim for the purposes of this application, although that was not a final determination because further information was required from Staunton. However, what is significant is that a claim of that value would result in a dividend, estimated at approximately €26,000, being paid to Staunton, if it were included in the Scheme, and a proportionate reduction in the dividend payable to all of the other Scheme Creditors. That estimated dividend represents 0.41% of the total estimated dividends of €6,318,500 out of the Insurance Proceeds. 7.5 The position adopted on behalf of the Company at the hearing of the application was expressed as neutral, in the sense that, if the Court was persuaded that Staunton’s claim should be included, it should be sanctioned, rather than that the whole Scheme would fall on a claim which is going to yield a dividend of only €26,000. However, there was no concession on the part of the Company that the timeframe for making a claim was too short and the point was made that all of the other claimants, whether having a contractual relationship with the Company or not, were able to make their claims in time. 7.6 As I have recorded earlier, the position of Rosderra, which of all of the Scheme Creditors will incur by far the largest reduction of its dividend if Staunton is admitted, indicated through its counsel was that it was not objecting to Staunton being included. I think I am correct in stating that the other Scheme Creditors who were represented at the hearing did not express a view on the issue. In the overall context of the Scheme, the de minimis principle does seem to come into play in relation to the claim of Staunton, as its counsel submitted. Therefore, I propose making it a condition of the sanctioning of the Scheme that the claim of Staunton, as determined by the Expert in accordance with the Scheme, as if it had been submitted by 12th February, 2010, will be met on the same basis as the claims of the other non-connected Scheme Creditors. I do so on the basis that it is the fair and equitable, and also the common sense, approach to adopt, given the relatively minor impact the decision will have on the generality of creditors. Having regard to the view I have expressed earlier in relation to the limited jurisdiction of the Court to modify a scheme on an application under s. 201(3), insofar as there is a modification of the Scheme inherent in that decision, it is a very minor modification in that it has extended the time for submitting a claim by a relatively short period, which has not impeded the process. However, it is appropriate to acknowledge that the decision is based more on pragmatism than on principle. 8. Undertakings/order 8.2 Accordingly, I propose making an order under s. 201(3) sanctioning the Scheme subject to –
(b) the connected Scheme Creditors and Rosderra giving undertakings to the Court in the terms outlined. 8.3 There will also be an order under s. 201(2) permanently staying all proceedings and restraining all further proceedings by the Scheme Creditors against the Company in relation to claims arising out of the Contamination Event as defined in the Scheme.
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