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Cite as: [2013] IEHC 574
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Judgment Title: Command Financial Services Limited & Companies Acts Neutral Citation: [2013] IEHC 574 High Court Record Number: 2013 146 COS Date of Delivery: 10/12/2013 Court: High Court Composition of Court: Judgment by: Laffoy J. Status of Judgment: Approved |
Neutral Citation: [2013] IEHC 574 THE HIGH COURT [2013 No. 146 COS] IN THE MATTER OF COMMAND FINANCIAL SERVICES LIMITED AND IN THE MATTER OF THE COMPANIES ACTS 1963 – 2013 Judgment of Ms. Justice Laffoy delivered on 10th day of December, 2013. The second round 2. The second round was the re-entry of the matter so that the Court could determine what, if any, ancillary order to make to enable the Petitioner to solve its problem and on what terms any such order should be made. The Petitioner’s problem, as outlined in the April Judgment (para. 7), arises from the fact that, as the Company’s insurer, it indemnified the Company in relation to certain proceedings in the High Court in which it was one of the defendants, engaged legal representatives to act on behalf of the Company and defrayed the costs and expenses of such legal representatives. Subsequently, by order of the High Court (Peart J.) made in those proceedings on 18th January, 2011, that is to say, before the Company was struck off the register, it was ordered by consent that the proceedings against the Company be struck out and that the Company recover against the plaintiffs its costs up to 23rd January, 2010, such costs to be taxed in default of agreement. The Petitioner’s problem is that recovery of the costs from the plaintiffs in those proceedings, which in April 2013 were estimated at €64,381.10, must be pursued in the name of the Company and that cannot be done while the Company remains struck off the register. 3. In the second round of the application, counsel for the Petitioner illustrated the Petitioner’s problem by reference to a passage from the decision of O’Connor L.J. in M.H. Smith (Plant Hire) Limited v. D.L. Mainwaring (t/a Inshore) [1986] BCLC 342, in which the plaintiff’s insurers had sought leave to maintain proceedings in the plaintiff’s name subsequent to it being dissolved after a winding up. In delivering judgment in the Court of Appeal, O’Connor L.J. stated (at p. 343):
4. In the April Judgment, two judgments of the High Court of England were referred to in each of which an order restoring a company to the register was made consequential on an order declaring the dissolution of the company void: In re Belmont & Co. Ltd. [1952] 1 Ch. 10 (Belmont); and In re Test Holdings (Clifton) Ltd. [1970] 1 Ch. 285 (Test Holdings). What those authorities illustrate is that by 1970 there was a well established practice in the United Kingdom, based on the decision in Belmont, that on an application under s. 352 of the Companies Act 1948, which was the provision in force in England at the time which corresponded to s. 310 of the Act of 1963, where dissolution followed the striking of the company off the register under s. 353 of the Companies Act 1948, which was the provision in force in England at the time which corresponded to s. 311 of the Act of 1963, in addition to declaring the dissolution void, the Court, under its inherent jurisdiction, would order the restoration of the company’s name to the register. Re-entry hearing Core issue 7. In order to determine whether the Court has any such jurisdiction, it is necessary to consider the existing legislation on the voidance of dissolution of a company and on the power of the Registrar to strike the name of a company off the register coupled with the circumstances in which a company may be restored to the register following such strike-off. The relevant provisions are:
(b) s. 311 of the Act of 1963, as amended by the Companies (Amendment) Act 1982 (the Act of 1982) and the Companies (Amendment) (No. 2) Act 1999 (the Act of 1999); and (c) s. 12 (substituted by the Act of 1999) and s. 12B (inserted by the Act of 1999) of the Act of 1982. 8. Sub-section (1) of s. 310, which is of relevance for present purposes, provides as follows:
9. Section 310(1) is a verbatim replication of s. 223 of the Companies (Consolidation) Act 1908 (the Act of 1908), as was s. 352(1) of the Companies Act 1948, which was under consideration in Belmont and Test Holdings. Section 311
13. The provision of the English Companies Act 1948 under which the company in Belmont was struck off the register and became dissolved was s. 353 thereof. Sub-section (6) of s. 353 was in similar terms to subs. (8) of s. 311 of the Act of 1963 in its original unamended form. Sections 12 and 12B of the Act of 1982
15. By virtue of subs. (3) of s. 12B, on an application made by any member, officer or creditor of a company aggrieved by the fact of the company having been struck off the register under section 12(3) or 12A(3) which is made before the expiration of 20 years from the publication of the relevant notice which gave effect to the dissolution, the court –
16. Sub-section (6) of s. 12B mandates that the Court, in making an order under subs. (3) on the application of a creditor of the company, shall direct one or more specified members or officers of the company within a specified time to deliver all outstanding annual returns as required by the Act of 1963. By virtue of subs. (5), there is a more stringent inclusion in the order, where the application is made by a member or officer of the company. 17. It was acknowledged on behalf of the Petitioner that the Petitioner did not have locus standi to bring an application to restore the Company under s. 12B(3), because it is not a creditor of the Company. However, counsel for the Registrar pointed out that there is an alternative remedy available in this case to resolve the Petitioner’s problem. Sub-section (7) of s. 12B confers on the court power to make an order similar to the order it is empowered to make under subs. (3) (although without being mandated to include the requirements set out in subs. (6)) on an application by the Registrar within the relevant twenty year period and on notice to each person who is to the knowledge of the Registrar an officer of the company. Counsel for the Registrar submitted that this provision has been included to cater for the eventuality that a third party, who does not have standing under subs. (3), may be negatively affected by the striking off and dissolution of a company. It was made clear to the Court that, in this case, the Registrar is willing to bring such an application as a means of resolving the Petitioner’s problem. The Registrar’s position is that it is open to the Registrar to apply to the Circuit Court, Dublin Circuit for such an order. Of course, while that is so, it is settled that the jurisdiction of the Circuit Court is not exclusive and it is open to the Registrar to apply to the High Court instead (per the Supreme Court in Re Deauville Communications Worldwide Limited [2002] 2 IR 32). 18. For completeness, it should be made clear that, in outlining the provisions of s. 12B(3), the focus has been on its application to a situation where the Company has been struck off in accordance with s. 12(3) of the Act of 1982. However, that sub-section also applies where a company has been struck off and become dissolved by virtue of subs. (3) of s. 12A of the Act of 1982 for failure to comply with the notice given by the Revenue Commissioners under s. 882 of the Taxes Consolidation Act 1997 (the Act of 1997). In such a case, subs. (6) of s. 12B mandates the court, in making the restoration order, to direct delivery of all outstanding statements to the Revenue Commissioners by one or more specified members or officers of the company within a specified period. 19. Finally, it is worth noting two provisions highlighted by counsel for the Revenue Commissioners, namely:
(b) Section 12C of the Act of 1982, as inserted by the Act of 1999, provides that, where a company has been struck off the register under s. 12A(3) of the Act of 1982, the registrar, on an application of a member or officer of the company who is aggrieved by the fact of the company having been struck off made within twelve months from the publication of the strike-off, may restore the name of the company to the register provided the registrar “has received confirmation from the Revenue Commissioners that all outstanding, if any, statements required by s. 882 of the Taxes Consolidation Act 1997 have been delivered to the Revenue Commissioners”. Position of Registrar in relation to making an ancillary order under s. 310
(b) s. 311(7) of the Act of 1963 and s. 12B(2) of the Act of 1982, each of which contains a proviso preserving the power of the court to wind up a company the name of which has been struck off the register. 21. Following a careful comparative analysis of s. 310 of the Act of 1963 and the statutory provisions which govern the making of a restoration order, in the context of the relevant authorities, counsel for the Registrar did not urge the Court to find that it has no jurisdiction to make an order restoring the Company to the register under s. 310(1) of the Act of 1963 following the making of a declaration that the dissolution was void. The furthest counsel went was to submit that the Court probably has such jurisdiction, while adding the caveat that there is uncertainty around the issue, because the Oireachtas could easily have expressly authorised the Court to make a restoration order under s. 310(1) where necessary and, in any event, there is limited and unsatisfactory authority in support of the proposition that the Court has jurisdiction. Counsel for the Registrar pointed to the impracticalities inherent in the outcome, if the Court does not have such jurisdiction under s. 310 to reverse the striking of the company’s name off the register on the application of a disadvantaged third party who does not have standing to invoke the statutory provisions in relation to making restoration orders. It was suggested that the power to make the declaration voiding the dissolution “on such terms as the Court thinks fit”, if taken in isolation and given its ordinary meaning, is probably broad enough to allow the Court to make a restoration order ancillary to the principal relief. That suggestion raises the question whether that phrase may be considered in isolation, the answer to which must be that it cannot. The Court’s task is to construe s. 310 in the context of the Act of 1963 as it is now enacted as a whole so as to ascertain the intention of the Oireachtas. 22. However, counsel for the Registrar advanced the following matters, which are undoubtedly pertinent, for the Court’s consideration, namely:
(b) that, given that s. 311(8) and s. 12B(3) are expressly tailored to address the issues that arise on such applications, it would be undesirable if s. 310(1) could be invoked except in cases where the applicant is not constrained to do so for lack of standing, because otherwise applicants might seek to use s. 310(1) as a mechanism for circumventing the conditions imposed by the Court on the making of an order under s. 311(8) or s. 12B(3); (c) that, if the Court has jurisdiction to restore a company to the register by way of ancillary order under s. 310(1), the jurisdiction is clearly discretionary and should only be exercised where the applicant does not have the option of proceeding under s. 311(8) or s. 12B(3), as the case may be; (d) that, if the Court has jurisdiction to make a restoration order under s. 310(1), it must also have jurisdiction to direct the filing of outstanding annual returns and should do so, unless cause is shown to the contrary; and (e) that although s. 310 does not stipulate the registrar as a notice party, it is desirable that the registrar should be put on notice of applications made thereunder where the dissolution follows a strike-off under s. 311 of the Act of 1963 or s. 12 of the Act of 1982. The position of the Revenue Commissioners in relation to making an ancillary order under s. 310 25. It was submitted on behalf of the Revenue Commissioners that there is a broad definition of “company” in s. 4 of the Act of 1997 and that it is sufficiently broad to include a company which has been struck off the register but remains otherwise in existence, for example, by reason of a declaration made by a court under s. 310(1) voiding a dissolution. 26. The Revenue Commissioners recognise that locus standi to seek relief under s. 310 goes beyond former liquidators of the dissolved company but it was submitted that, where the jurisdiction created by that provision is relied on by persons other than former liquidators, the court’s discretion in dealing with ancillary matters must also be broad. In particular, it was submitted that where s. 310 is relied on to void the dissolution of a company, where that dissolution ultimately came about following a failure to submit statutory returns or statutory taxation statements, then it is a necessary corollary of the court’s power to void the dissolution that such statutory returns be made. The Revenue Commissioners sought clarification from the Court on a consistent approach to orders consequential on a declaration voiding dissolution pursuant to s. 310. Do Belmont and Test Holdings constitute persuasive authorities?
28. That distinction also applies to Test Holdings, in which Megarry J. was dealing with two cases. In each case the company was dissolved under s. 353 (the analogue of s. 311) following a strike-off, but in each case the applicant had proceeded under s. 352(1) (the analogue of s. 310(1)) rather than under the procedure for restoring the name of the company to the register under s. 353(6) (the analogue of s. 311(8)). In one of the cases, the applicant did have standing to bring the application under s. 353(6), whereas in the other case Megarry J. stated that the applicant may or may not have been a creditor. For present purposes, the interesting feature of the judgment of Megarry J. is that he contrasted the English provisions analogous to s. 310(1) and s. 311(8) to each other. The conclusion he came to was that it was possible to contend that Belmont was a decision which ought not to be followed. However, he stated (at p. 291) that counsel for the Registrar of Companies had not urged upon him that he ought to refuse to follow the decision, partly because the case had by then been relied on in many cases. He also remarked that the court “ought to be slow to resort to fine points of construction in order to prevent an applicant from exercising a choice which the legislature appears to have conferred upon him, particularly when the two provisions exhibit considerable variation in their scope and application”. He stated that, if Belmont had not been decided, it might have been “a close question whether or not to decide the matter as it was decided in that case”. But the decision was there and he concluded, on the whole, that the right course for a judge at first instance to take was to follow. He went on to consider whether the Registrar of Companies should be a notice party on an application under the corresponding provision to s. 310(1) in a case in which the company had been struck off under the provision corresponding to s. 311 but was still carrying on business. He held that the normal rule should be that the Registrar of Companies ought to made a respondent to the notice of motion and he went on to consider whether the Registrar of Companies “should confine himself to the economy of a letter as contrasted with the comfort of counsel”, stating that he did not think it possible to say that he should. However, he continued (at p. 293):
Conclusion on the core issue 31. What is of particular significance for present purposes, however, is that in 1999 the Oireachtas substituted a new provision (s. 12) for s. 12, as originally enacted and amended by the Act of 1990, and it enacted four additional provisions, sections 12A, 12B, 12C and 12D, as set out in s. 46 of the Act of 1999. In dealing with the type of situation like the situation which arose in the case of the Company, where there had been default by the Company in complying with its statutory obligation to make annual returns for one or more years, the effect of the enactment of those provisions may be summarised as follows:
(b) Specific measures which have been included in the new provisions for lifting that sanction by the restoration of the name of the company to the register may be invoked, namely: (i) an application by a member or an officer of the company to the Registrar within the twelve month limitation period stipulated in s. 12C, or (ii) an application by a member, officer or creditor of the company to the court within the twenty year limitation period provided for in s. 12B(3), or (iii) an application to the court by the Registrar under s. 12B(7). (c) On an application other than by a member or officer of the company under subs. (3) of s. 12B which, in reality, is an application by a creditor of the company, the court, unless cause is shown to the contrary, must direct that the default in making the annual returns be rectified by directing a specified member or officer of the company to deliver the outstanding returns within a specified period as provided in subs. (6) of s. 12B. However, where the application is by the Registrar under subs. (7) of s. 12B, there is no corresponding obligation on the court. 33. Recalling the observations of Megarry J. in Test Holdings quoted at para. 28 above, the dilemma here is not whether s. 310(1) and s. 311(8), which have a similar provenance, reflect a coherent policy. The problem here arises from a strike-off and consequential dissolution in the context of a statutory framework which was introduced long after the enactment of s. 310(1) and, in my view, must be regarded primarily as a discrete statutory scheme designed to ensure compliance with certain provisions of the Companies Acts and the taxation code, albeit that it does not lessen the effect of other similar statutory schemes, for example, s. 311, which is designed to address defunct companies. It may be that there is a lacuna in the statutory scheme embodied in s. 12 and the succeeding sections of the Act of 1982, as amended, in that it does not provide for a remedy for a person disadvantaged by a strike-off in the manner in which the Petitioner has been disadvantaged. However, it is for the Oireachtas, not the court, to supply that lacuna, if it exists, and if it is considered appropriate to give a third party in the position of the Petitioner such a remedy. 34. Accordingly, I have come to the conclusion that the Court does not have jurisdiction to make a consequential order restoring the Company to the register on this application under s. 310(1). 35. When the Companies Bill currently before the Oireachtas (the Companies Bill 2012 as initiated) is being considered by the Oireachtas, to use the words of Megarry J., “consideration might with advantage be given” to the point raised by the Petitioner on this application. While, in Part 12 of the Bill, which deals with “Strike Off and Restoration”, a revision of the existing provisions in a manner which does reflect a coherent policy is proposed, nonetheless, subs. (2) of s. 739, which deals with restoration on application to court, does not envisage such an application being made by a disadvantaged third party who is not a creditor of the company, such as the Petitioner in this case. Whether such a third party should be given a remedy of the type proposed is a matter of policy. Costs of the application Alternative solution |