H273
Judgment Title: Amantiss Enterprises Limited & anor & Companies Acts Neutral Citation: [2014] IEHC 273 High Court Record Number: 2012 696 COS Date of Delivery: 09/05/2014 Court: High Court Composition of Court: Judgment by: Laffoy J. Status of Judgment: Approved |
Neutral Citation: [2014] IEHC 273 THE HIGH COURT [2012 No. 696 COS] IN THE MATTER OF: AMANTISS ENTERPRISES LIMITED (IN VOLUNTARY LIQUIDATION) AND WILBURY LIMITED (IN VOLUNTARY LIQUIDATION) AND IN THE MATTER OF: THE COMPANIES ACTS 1963 - 2012 Judgment of Ms. Justice Laffoy delivered on 9th day of May, 2014 Background 2. The first of a number of reliefs sought on the originating notice of motion was an order pursuant to s. 309 of the Companies Act 1963 (the Act of 1963) directing the Liquidator to convene meetings of the creditors of Amantiss and of Wilbury for the purposes of ascertaining their wishes as to the conduct of an appeal on behalf of Amantiss and Wilbury to the Supreme Court. That appeal was from an order made by the High Court (Cooke J.) on 26th July, 2012, which was perfected on 5th September, 2012, dismissing proceedings (the Competition Proceedings) initiated in the High Court in December 1996 between Framus Limited, Amantiss (in voluntary liquidation) and Wilbury (in voluntary liquidation), as plaintiffs, and CRH Plc and four related companies (although not using the expression “related companies” in any technical sense) (collectively referred to as the CRH Respondents), Readymix Plc, Kilsaran Concrete Products Limited (Kilsaran) and CPI Limited, as defendants (Record No. 1996/10658P). As it had happened that the Liquidator had convened a meeting of the creditors of each of the companies in liquidation prior to the hearing of Mr. Maye’s application, on the hearing of the application the Court was only concerned with giving directions as to the conduct of those meetings which were to be held on 24th January, 2013. Those directions and the Court’s treatment of the Liquidation Application are dealt with in the judgment of the High Court (Laffoy J.) delivered on 22nd January, 2013 (Neutral Citation [2013] IEHC 21). The balance of the Liquidation Application on foot of the originating notice of motion was adjourned generally with liberty to re-enter. The order of the High Court dated 22nd January, 2013 is the subject of an appeal to the Supreme Court. 3. By a notice of motion (the Re-entry Motion), which was returnable in the High Court on 8th July, 2013, Mr. Maye, once again described as a creditor of Amantiss and of Wilbury, sought an order from the High Court re-entering the Liquidation Application and sought directions as to the hearing and determination of issues “concerning the authorisation of the appeals” on behalf of Amantiss and Wilbury to the Supreme Court from the decision of the High Court dismissing the Competition Proceedings. As has been explained in my judgment delivered in the High Court on 15th July, 2013 (Neutral Citation [2013] IEHC 332), the application for re-entry was consequent on successful applications by, inter alia, the CRH Respondents to strike out the appeal brought on behalf of Amantiss and Wilbury against the order of the High Court dismissing the Competition Proceedings. Although the order of the Supreme Court, which was made on 14th May, 2013, struck out the appeal of those appellants, the effect of the order has been stayed to enable the jurisdiction of the High Court to be invoked to resolve a dispute, which is, in essence, a dispute as to whether the Liquidator had given prior authority or consent to the filing of the notice of appeal in the name of Amantiss and Wilbury and to proceeding with the appeal in the Supreme Court. 4. In the judgment of 15th July, 2013 the rationale underlying the decision of the Supreme Court to give Mr. Maye, representing the creditors of Amantiss and Wilbury, the opportunity to invoke the supervisory jurisdiction of the High Court in relation to the liquidation of Amantiss and Wilbury to enable him to seek directions in relation to the prosecution of the appeals brought on behalf of those companies is outlined. This judgment is to be read in the context of that judgment. Further, having heard submissions from the relevant parties, in that judgment the Court set out its conclusions as to the issues which arose on the Re-entry Motion and the order and manner in which they should be addressed. Six issues were outlined in the judgment (para. 21). For convenience, the six issues are set out in the Appendix to this judgment. Issue (1) was framed as whether Mr. Maye had the necessary authority or consent to authorise the issue and service of notice of appeal in the Supreme Court appeal on behalf of Amantiss and Wilbury against the decision of the High Court dismissing the Competition Proceedings, and, if so, the extent of that authority. On reflection, it would have been preferable if that issue had been formulated as whether Mr. Maye had the necessary authority or consent of the Liquidator to authorise the initiation of the appeal in the names of Amantiss and Wilbury, thus identifying the only possible source of such authority or consent, that is to say, the Liquidator. The hearing of the issues on the Re-entry Motion 6. While issue (1), which is primarily an issue of fact, had been the subject of affidavit evidence filed on the Re-Entry Motion, it was heard on oral evidence. Mr. Maye testified and he was cross-examined by counsel on behalf of the Liquidator. The Court also allowed him to be cross-examined by counsel on behalf of the CRH Respondents. The Liquidator also gave oral evidence. He was cross-examined by counsel on behalf of Mr. Maye and by counsel on behalf of the CRH Respondents and he was re-examined by his own counsel. As was outlined in the judgment of 15th July, 2013, in an affidavit sworn by him on 8th July, 2013, the Liquidator had averred that he had no difficulty in resigning as liquidator of both companies, but he did not believe it was appropriate for him to resign without the sanction of the Court and without an appropriate replacement liquidator being either agreed or appointed by the Court. 7. In relation to the determination of the issues, the Court had the benefit of written and oral submissions from counsel for Mr. Maye and counsel for the CRH Respondents on all issues. The only legal issue upon which counsel for the Liquidator addressed the Court was whether the Court has jurisdiction to sanction the resignation of the Liquidator as liquidator of Amantiss and Wilbury and, if so, whether it should exercise that jurisdiction. However, as will be outlined, in his evidence, the Liquidator was adamant that Mr. Maye did not have his consent or authority to initiate the appeal on behalf of Amantiss and Wilbury. The Court also had the benefit of written submissions from counsel for Kilsaran, but its legal representatives did not otherwise participate in the hearing of the issues. The procedural context in which the issues are being determined 9. First, there were three plaintiffs in the Competition Proceedings. The first named plaintiff was Framus Limited, which Mr. Maye described in his grounding affidavit of 18th December, 2012 as a company related to Amantiss and Wilbury and of which he is also a director and, I understand, a shareholder. Framus Limited remains an appellant before the Supreme Court against the order dismissing the Competition Proceedings. However, Framus Limited is not before the Court on this application. As will appear, back in 1996 Framus Limited was involved in the arrangement in consequence of which Amantiss and Wilbury became co-plaintiffs with it in the Competition Proceedings. Obviously, because of the absence of Framus Limited from this application, the Court cannot make any finding as to the existence of a contractual relationship between the Liquidator, as liquidator of Amantiss and Wilbury, on the one hand, and Framus Limited, on the other hand, or as to the appointment by the Liquidator of Framus Limited as his agent in relation to the Competition Proceedings, which would bind Framus Limited. 10. Secondly, the real adversaries on the issue as to whether there was consent or authorisation by the Liquidator to the initiation of the appeal brought on behalf of Amantiss and Wilbury are the Liquidator, who contends that there was no such consent or authorisation, on the one hand, and Mr. Maye, who contends that there was, on the other hand. As will appear, Mr. Maye was involved in the arrangement under which Amantiss and Wilbury were joined as co-plaintiffs in the Competition Proceedings. While it is impossible to determine with any certainty the capacity in which Mr. Maye was so involved, whether it was in his own right or as agent for Framus Limited, what can be said with certainty is that the arrangement was not based on the standing which Mr. Maye has invoked to maintain the Liquidation Application - as a creditor of Amantiss and Wilbury. It emerged from the evidence that Mr. Maye did not become a creditor of Amantiss and Wilbury until three years after the winding up of both companies commenced and after the Competition Proceedings had been initiated. He did not become a creditor until around June 1997 when he discharged liabilities of those companies to Allied Irish Banks, in respect of which liabilities he was also guarantor in favour of the Bank. 11. Thirdly, as already noted, the CRH Respondents and Kilsaran were allowed to participate in the Liquidation Application because they also claim to be creditors of Amantiss and Wilbury, having obtained orders for costs against those companies arising out of the Competition Proceedings as recently as 2012 and they were also allowed to participate on the hearing of the Re-entry Motion. However, neither the CRH Respondents nor Kilsaran had any involvement in the arrangement under which Amantiss and Wilbury were joined as co-plaintiffs with Framus Limited in the Competition Proceedings. As regards the issue as to whether the Liquidator authorised or consented to the initiation of the appeal on behalf of Amantiss and Wilbury, the reality of the situation is that those parties have “piggy-backed” on the Liquidator’s version of the facts and his contention as to the extent of the authority he gave in relation to the joinder and continuance of Amantiss and Wilbury in the Competition Proceedings in support of their contention that the appeal was initiated without the authorisation or consent of the Liquidator. It was the Court, of course, which gave those parties the opportunity to participate on the determination of the issues and it is wholly understandable that they adopted an approach which was consistent with their ultimate objective, namely, ensuring that the appeal brought in the name of Amantiss and Wilbury does not proceed. 12. Finally, as recorded earlier, the position of the Liquidator is that he is prepared to walk away from the liquidation of both companies, but he seeks the comfort of Court sanction or approval. This feature, in combination with the foregoing features, has made the Court’s task in determining the issues extremely difficult. Issue (1) - whether Mr. Maye had the necessary authority or consent of the Liquidator to initiate the appeal to the Supreme Court in the names of Amantiss and Wilbury: the evidence
(b) the progress of the Competition Proceedings; (c) the Liquidator’s knowledge of the application to dismiss the Competition Proceedings and its likely consequences and implications; and (d) the Liquidator’s knowledge of the dismissal of the proceedings and subsequent events. 14. The evidence established that the business relationship of the Liquidator, whose accountancy firm, Donegan & Associates, is authorised by the Institute of Certified Public Accountants in Ireland, with Mr. Maye and, indeed, with other members of the Maye family and its corporate vehicles, although not with Amantiss and Wilbury, pre-dated the voluntary liquidation of Amantiss and Wilbury. The Liquidator was the auditor of Framus Limited and he was the financial adviser to the Maye family. In 1994 the prospect of Amantiss and Wilbury, each of which was insolvent at the time, being parties to what ultimately became the Competition Proceedings was canvassed by Mr. Maye with the Liquidator prior to his appointment as liquidator of Amantiss and Wilbury. The Liquidator accepts that there was agreement that, if there was legal advice to the effect that Amantiss and Wilbury had a good cause of action against, inter alia, the CRH Respondents, the Liquidator would authorise proceedings on their behalf. Although he was appointed as liquidator of both companies in April 1994, the Liquidator did not have to make the decision whether to authorise the proceedings until late 1996. 15. By late 1996, Framus Limited had instructed Philip Lee & Associates (Philip Lee), Solicitors, in connection with the intended proceedings. Before the proceedings, which ultimately included Amantiss and Wilbury as co-plaintiffs, were commenced, there was communication between Philip Lee and the Liquidator and the solicitors who were advising him at that time. 16. By facsimile transmission dated 14th November, 1996 to the Liquidator, which was copied to Mr. Maye, Philip Lee furnished a letter of advice from Mr. William Shipsey, S.C. Philip Lee set out their understanding that the Liquidator had spoken to Mr. Maye, who had “confirmed that Framus Limited will bear any plaintiff costs in relation to the proposed action”. Philip Lee also confirmed that the firm would “charge neither Donegan & Associates nor the liquidator personally for work in relation to this matter”. It was intimated that the firm would “phone” later in the day for confirmation that it was in order for Philip Lee “to issue proceedings in the name of” Wilbury and Amantiss. In relation to the letter of advice from Mr. Shipsey, according Mr. Maye’s evidence on affidavit, it concerned “the risk of the liquidator being fixed with liability for” the costs of the defendants in the Competition Proceedings. The Liquidator testified that he was thus “provided with comfort” in relation to the issue of his potential exposure to the defendants’ costs, as well as in relation to the plaintiffs’ costs. Understandably, the letter of advice was not put in evidence. However, lest the Court be left with a misleading impression as to its contents, the Court was informed by counsel for Mr. Maye and counsel for the CRH Respondents, both of whom had seen the letter, that it did not deal in any way with the prospects of success or the merits of the litigation. 17. The Liquidator sought independent legal advice in relation to the proposed proceedings from Randal Doherty & Associates (Randal Doherty), Solicitors. On 22nd November, 1996, Philip Lee wrote to Randal Doherty, referring to a telephone conversation on the previous evening, and confirming that the Liquidator had “agreed to the issuing of proceedings in the above matter but has the right to discontinue proceedings at any time he deems appropriate”. On the 27th November, 1996 Randal Doherty responded by letter to Philip Lee headed -
Our Client - Des Donegan.” 18. In summary, Mr. Maye’s position is that the commencement of the Competition Proceedings in the name of Amantiss and Wilbury was expressly authorised by the Liquidator on the following terms:
(b) Framus Limited would conduct the case, reporting progress in the case to the Liquidator periodically; and (c) the Liquidator reserved the right to discontinue the proceedings at any time he deemed appropriate. 19. The Liquidator agreed that the arrangement between him and Mr. Maye before the Competition Proceedings commenced was as outlined by Mr. Maye. His evidence was that, as the case was likely to be “quite protracted”, his understanding was that on an ongoing basis Mr. Maye would provide him with material updates in relation to the case, without having to go into the minutiae or micro-details relative to the case itself. 20. Accordingly, there is no factual conflict as to the terms of the arrangement which were expressly agreed in November 1996. The controversy is as to their effect. Mr. Maye acknowledged that at the time, in November 1996, he did not discuss with the Liquidator the possibility of an appeal to the Supreme Court either on a procedural matter or in the event of the plaintiffs being unsuccessful in the action. The Liquidator, in cross-examination, acknowledged that the arrangement reached in November 1996 was not limited in time, that it remained in place at all times thereafter and was not varied, and that he did not exercise what was accepted by Mr. Maye was his “unfettered” right to discontinue the proceedings at any time. Progress of Competition Proceedings 21. The plenary summons in the Competition Proceedings was issued on 4th December, 1996. Mr. Maye has exhibited in his grounding affidavit sworn on 18th December, 2012, a table setting out the procedural chronology from then onwards. While there was a considerable amount of procedural activity until 15th December, 2005, the proceedings remained dormant thereafter until mid-2011. One procedural step prior to the dormant period to which Mr. Maye attached some significance was that there was an appeal to the Supreme Court against orders made in the High Court in 2002 on an application for discovery by the plaintiffs and an application for security for costs by the CRH Respondents, which was the subject of a judgment of the Supreme Court delivered on 22nd April, 2004, which is reported at [2004] 2 IR 20. Mr. Maye emphasised that the Liquidator was aware of that appeal to the Supreme Court and never raised any issue about it. While the Liquidator’s evidence was that he was not made aware of the intention to appeal prior to the initiation of that appeal, I consider that that minor factual controversy is of no relevance to the issue as to whether there was consent or authority of the Liquidator to the initiation of the appeal against the order dismissing the Competition Proceedings. As counsel for the CRH Respondents submitted, that order dismissed the proceedings as a matter of law and, for the purposes of the principles of res judicata, it was a decision on the merits, albeit that it did not follow a hearing on the merits. Subject to the right to appeal to the Supreme Court, it was the final order marking the end of the proceedings and of the cause of action in the High Court. Thus it was fundamentally different to an interlocutory order, such as an order on an application for discovery or for security for costs. However, there is nothing to suggest that either the Liquidator or his solicitor or Mr. Maye or Philip Lee had such a distinction or difference in mind back in 1996. 22. What brought the dormant period to an end was that on 1st June, 2011 the plaintiffs, including Amantiss (in voluntary liquidation) and Wilbury (in voluntary liquidation), served notice of intention to proceed. That step precipitated various motions by the defendants to dismiss the plaintiffs’ claim for want of prosecution, commencing with a motion dated 2nd August, 2011 on behalf of the CRH Respondents. The motions were heard in February 2012. Following the delivery of judgment on 19th July, 2012, by order of the High Court dated 26th July, 2012, which as previously recorded was perfected on 5th September, 2012, it was ordered that the plaintiffs’ action against the defendants be dismissed and that the defendants recover the costs of the proceedings against the plaintiffs. The perfected order, in turn, led to the service by Philip Lee on behalf of all three plaintiffs, including Amantiss and Wilbury, of notice of appeal on 26th September, 2012 and the filing of the notice of appeal in the Supreme Court. Liquidator’s knowledge of the application to dismiss Competition Proceedings and its likely consequences and implications 23. I am satisfied on the evidence that the Liquidator had no real concern as to the manner in which Mr. Maye was fulfilling his obligation to report on the progress of the Competition Proceedings up to and, indeed, beyond the point in time at which the motions to dismiss the proceedings were initiated. The Liquidator acknowledged that he had been informed by Mr. Maye that the plaintiffs had secured access to new evidential material in late 2010 or early 2011, which might give impetus to the proceedings. He also acknowledged that he was aware, around the end of 2011 or the beginning of 2012, that the motions to dismiss had issued and were coming on for hearing, although his evidence was that he was not aware of the precise date on which the hearing would take place. In this context, it is clear on the evidence that an issue had been raised by at least one of the defendants on the motions to dismiss as to the non-compliance by the Liquidator with the statutory requirements in relation to filing returns in the Companies Registration Office. Mr. Maye took the issue of non-filing up with the Liquidator and his firm. He was eventually assured by a member of the firm that the non-filing was due to an oversight and would be rectified as soon as possible. 24. After the motions to dismiss were heard in the High Court in February 2012 but before judgment was delivered there was a meeting between Mr. Maye and the Liquidator. That meeting occurred on 26th June, 2012. The meeting had been sought by Mr. Maye. His evidence was that it was sought for two reasons. One, which was totally unconnected to the affairs of Amantiss and Wilbury, was to discuss possible involvement by the Liquidator, presumably in his professional or personal capacity, with “contacts” which Mr. Maye had in the United Kingdom in relation to property investment opportunities in this jurisdiction. The other reason was to bring the Liquidator up to date on what was happening in the Competition Proceedings. There is a conflict on the evidence, which is the only factual conflict between Mr. Maye and the Liquidator, as to what, if any, commitment Mr. Maye gave to the Liquidator at the end of the meeting in relation to the pending judgment of the High Court. 25. Mr. Maye’s evidence was that, having told the Liquidator about the motions to dismiss and the fact that the judgment on the motions was pending, in response to a query from the Liquidator as to “what would happen next”, he explained that, whatever the outcome, there was likely to be an appeal. However, the Liquidator did not indicate to Mr. Maye that he should be contacted after judgment was delivered. Mr. Maye’s understanding was that the authority given by the Liquidator to prosecute the Competition Proceedings had remained unchanged. Mr. Maye’s evidence was that his understanding was that there was continuing authority in relation to the prosecution of the Competition Proceedings, including authority to initiate an appeal to the Supreme Court, if the High Court dismissed the actions of Amantiss and Wilbury in the Competition Proceedings. 26. In his affidavit sworn on 8th July, 2013, the Liquidator was broadly in agreement with Mr. Maye as to how the meeting of 26th June, 2012 came about and its purpose. Although he averred that at the meeting the parties spoke “in very loose and general terms” about the Competition Proceedings, he did record that Mr. Maye told him that judgment was awaited and that “it could be appealed by either party”. He specifically averred that Mr. Maye did not ask for his consent or authority to appeal any judgment. That is not in dispute. However, he continued:
27. It was the Court, of course, which directed that the factual issue should be addressed on oral evidence. While between them, Mr. Maye and the Liquidator spent approximately five and a half hours in the witness box, the oral evidence added very little to the resolution of the factual issue which the Court has to determine. As to how the matter of the pending judgment on the motions to dismiss was left as between Mr. Maye and the Liquidator at the end of the meeting on 26th June, 2012, taking the evidence, including what transpired between them after 4th October, 2012, as a whole, I have come to the conclusion that it is not probable that Mr. Maye was specifically asked by the Liquidator to report back to him on the outcome of the motion to dismiss or that Mr. Maye indicated that he would so report. On the evidence, I am satisfied that after 26th June, 2012 the arrangement between the relevant parties remained the same as it had been since December 1996. Liquidator’s knowledge of dismissal of the causes of action of Amantiss and Wilbury and subsequent events 28. Notwithstanding that the decision of the High Court to dismiss the Competition Proceedings was reported in national daily newspapers, I accept the Liquidator’s evidence that he did not become aware of those reports at the time of publication. Further, I am satisfied on the evidence that the Liquidator first became aware -
(b) that Philip Lee had served and filed notice of appeal against that order in the name of Amantiss and Wilbury, as well as in the name of Framus Limited, and (c) of the grounds of appeal being advanced, 29. It is clear on the evidence that on 4th October, 2012, probably after receipt of that e-mail, the Liquidator also received a letter dated 4th October, 2012 from Arthur Cox. In that letter, Arthur Cox, having referred to -
(b) the letter of 27th November, 1996 from Randal Doherty to Philip Lee referred to earlier, a copy of which had been “passed” to them, and (c) the service of the notice of appeal on the CRH Respondents,
30. On 17th October, 2012, the Liquidator sent an e-mail to Mr. Maye to which there was attached a copy of the letter of 4th October, 2012 from Arthur Cox to him. The only reasonable inference to be drawn from the evidence is that the e-mail to Mr. Maye was precipitated by the letter from Arthur Cox, not by the furnishing to him of the copy of the notice of appeal and the affidavit attached to Mr. Maye’s e-mail of 4th October, 2012, because the Liquidator stated in that e-mail that he had learned “from the Arthur Cox letter” that Mr. Maye had moved to appeal the case to the Supreme Court. The Liquidator’s evidence was that he had obtained legal advice before he sent the e-mail of 17th October, 2012. The position he adopted in the e-mail in relation to the Competition Proceedings was as follows:
(b) for Mr. Maye to produce sufficient evidence of funds in an account which would cover costs to date, future potential Supreme Court costs and cover costs on an ongoing basis for him as Liquidator, in respect of independent legal advice. 31. Mr. Maye responded to that e-mail by e-mail on the same day, 17th October, 2012, at some length. The response did not satisfy the Liquidator who indicated in his next e-mail of 18th October, 2012 that he required “formal clarity” in writing as to each of the specific questions raised by him in his e-mail of 17th October, 2012 relating to “the significant issues of costs and their funding”. 32. That clarity was not forthcoming from Mr. Maye and eventually on 21st November, 2012, Adams, Solicitors, commenced correspondence on behalf of the Liquidator with Philip Lee, who, in this context, I am regarding as acting for Mr. Maye, that is to say, the capacity in which they are on record in the Liquidation Application and the Re-entry Motion. The correspondence continued between the two firms of solicitors. While I have had regard to the correspondence, I do not consider it necessary to outline its contents because as regards the factual issue the Court has to determine, the die was cast when the Liquidator adopted the position he adopted in his e-mail of 17th October, 2012 to Mr. Maye, in that, while asserting that his consent was necessary to the initiation of the appeal in the name of Amantiss and Wilbury and that he had not given it, he did not unequivocally require the appeal to be withdrawn. Issue (1): Conclusion 34. Two aspects of the events which occurred after the order of the High Court of 26th July, 2012 in relation to which the Court has been invited to draw certain inferences as to the motivation of the main protagonists require to be commented on. 35. First, it was suggested on behalf of the Liquidator that Mr. Maye’s motivation in only notifying the Liquidator of the order of the High Court dismissing the Competition Proceedings after the appeal to the Supreme Court was initiated and in not seeking the authority of the Liquidator to initiate the appeal on behalf of Amantiss and Wilbury was based on fear on the part of Mr. Maye that consent of the Liquidator to initiating the appeal would not be forthcoming. In particular, it was suggested that the fact that one of the grounds of appeal which the appellants intend to advance was that “there was and could have been a perception of bias” on the part of the trial Judge, contributed to Mr. Maye’s fear that the Liquidator’s consent would not be forthcoming. I do not consider it would be appropriate to draw such an inference as to the motivation of Mr. Maye. I think the probable explanation for the timing in relation to the filing and service of the notice of appeal was the obvious time constraint with which the appellants were faced due to the fact that the order of 26th July, 2012 had been stayed by the High Court only until 8th October, 2012 and that the perfected order was not available until 5th September, 2012, which obviously gave rise to a serious degree of urgency in initiating an appeal in such a contentious matter during the long vacation. 36. Mr. Maye invited the Court to draw the inference that the position adopted by the Liquidator in his e-mail of 17th October, 2012 to Mr. Maye was driven by the threat in relation to costs contained in the letter of 4th October, 2012 from Arthur Cox. I have already found that the e-mail was probably precipitated by the receipt of the communication from Arthur Cox on 4th October, 2012, rather than by the earlier communication received by the Liquidator from Mr. Maye on the same day. As regards the tone and content of the Liquidator’s e-mail, I am of the view that the only reasonable inference is that it was wholly informed by fear on the part of the Liquidator that the CRH Respondents would move against him personally in relation to the High Court costs already accrued and the prospective costs of the appeal to the Supreme Court. 37. Given that, as regards the arrangement on foot of which Amantiss and Wilbury were joined as co-plaintiffs in the Competition Proceedings I find that nothing had changed between November/December 1996 and 4th October, 2012, the nub of the issue of fact which the Court has to determine is whether the initial authority and consent given by the Liquidator, subject to his unfettered right to discontinue the proceedings, was limited to the prosecution of the proceedings in the High Court and did not extend to the initiation of an appeal in the event of the High Court proceedings resulting in an unfavourable outcome for the plaintiffs. There is no mention of either the High Court or the Supreme Court in the communications which passed between the solicitors in November 1996. Having said that, there is no doubt that the terminology used in the communications, for example, the references to “plaintiff costs”, “proposed action”, and “issuing of proceedings” is reflective of the proceedings at first instance in the High Court. It is also true that the terminology used did not reflect the possibility of the proceedings continuing to appeal stage. However, it would be a very simplistic approach to the construction of what the arrangement entailed to form the view that just because there was no reference to an appeal or to terminology which reflected the possibility of an appeal (for example, reference to plaintiff or appellant or respondent costs), the authority given by the Liquidator only extended to the prosecution of proceedings in the High Court. 38. The nature of the proceedings which were in contemplation in November 1996 and which were initiated in December 1996, as succinctly summarised in the judgment of the High Court of 19th July, 2012 at para. 2, involved very complicated claims based on national and European competition legislation and on tort law. It was obviously of crucial importance for the Liquidator to retain control over the proceedings insofar as they were brought in the name of Amantiss and Wilbury. The mechanism which the parties deployed to ensure that the Liquidator had such ultimate control in relation to the continuance of the proceedings was to reserve to him an unfettered right to discontinue the proceedings in the name of the companies of which he was liquidator at any time. Having regard to what transpired between the parties in November 1996 and subsequently, in my view, that was a right which the Liquidator could have exercised either while the proceedings were being prosecuted in the High Court, or, in the event of an appeal against a decision of the High Court unfavourable to Amantiss and Wilbury, at the commencement of or in the course of such appeal. In other words, there is nothing in the terms agreed in 1996 to suggest that the authority given by the Liquidator would automatically cease on the making of a final order of the High Court. The terms agreed provided that the authority would cease when the Liquidator would exercise his right to discontinue the proceedings on behalf of Amantiss and Wilbury, which on a commonsense interpretation of the terms expressly agreed could be exercised either in the course of the High Court proceedings or in the course of the appeal, in the event of an appeal. 39. The conclusion I have come to is that what was intended by the arrangement between the relevant parties in November 1996 was that Philip Lee, as solicitors having carriage of the Competition Proceedings for Framus Limited, had the express authority of the Liquidator for the joinder of Amantiss and Wilbury as co-plaintiffs in those proceedings and had the authority of the Liquidator to continue those proceedings, whether in the High Court or on appeal to the Supreme Court, until the Liquidator should intervene and exercise his right to discontinue the proceedings. That right, it seems to me, could only be exercised by the Liquidator giving express instructions to Philip Lee to discontinue the proceedings in the name of Amantiss and Wilbury or the appeal. In practice, the intermediary between the Liquidator and Philip Lee in relation to that authority was Mr. Maye, although the Liquidator could have given instructions directly to Philip Lee in relation to the conduct of the proceedings in the name of Amantiss and Wilbury. 40. Accordingly, I find that Mr. Maye, as the agreed intermediary between the Liquidator and Philip Lee, had the necessary authority from the Liquidator to authorise the issue and service of notice of appeal in Supreme Court appeal No. 445/2012 on behalf of Amantiss and Wilbury. While such authority was subject to the unfettered right of the Liquidator to discontinue the appeal, what has occurred since the Liquidation Application was initiated, in effect, means that the right was not exercised. However, questions arise as to whether -
(b) the decisions taken at the creditors’ meetings on 24th January, 2013, the conduct of which was governed by that order, continue to apply. Remaining issues: conclusions Issue (2)(a) 43. Issue (2)(a) is the only issue on which counsel for the Liquidator made submissions. It raises the question whether the Court has jurisdiction to sanction the resignation of the Liquidator and, if so, whether the Court should exercise the jurisdiction in this case. In this connection, counsel for the Liquidator referred the Court to the decision of the High Court (Hamilton J.) in Re Palgrave Murphy Limited (1978) 112 ILTR 81. That case involved a winding up by the Court. As Hamilton J. pointed out, under s. 228(c) of the Act of 1963 a liquidator appointed by the Court may resign, but there is nothing in the section which requires that the resignation should be accepted or approved by the Court, nor was there anything in the Rules of the Superior Courts then in force. Hamilton J. made the following observation:
44. In my view, the decision in Re Palgrave Murphy Limited has very little relevance to a creditors’ voluntary winding up. For obvious reasons, a voluntary winding up does not have the same degree of supervision by the Court as a compulsory winding up pursuant to an order of the Court. In the case of a creditors’ voluntary winding up, s. 270 of the Act of 1963 sets out the power to fill a vacancy in the office of a liquidator and provides:
45. Counsel for the Liquidator acknowledged that it is not necessary, and may not be desirable, for a liquidator in a voluntary liquidation to apply to Court for Court sanction or approval of his resignation. That is certainly the case. However, counsel for the Liquidator submitted that, having regard to the controversy surrounding the position of the Liquidator in this case, the Court might exercise its jurisdiction under s. 280 of the Act of 1963 to sanction his resignation. Section 280, which applies to all voluntary liquidations, provides that, inter alia, the liquidator may apply to the Court -
(b) to exercise “all or any of the powers which the court might exercise if the company were being wound up by the court”. 46. The position in which the Liquidator finds himself is very unusual. It is not an exaggeration to say that in October 2012 he found himself, as the saying goes, “between a rock and a hard place”. That, of course, was a consequence of having taken on the role of liquidator in circumstances where the companies of which he was liquidator, which were insolvent, were likely to be involved in very contentious and difficult litigation. However, the Liquidator was brought into the Liquidation Application by Mr. Maye and one of the reliefs sought by Mr. Maye against the Liquidator was an order pursuant to s. 277 of the Act of 1963 that he be removed as liquidator. While that relief has not been pursued by Mr. Maye, presumably because it has not been necessary to do so in the light of the approach adopted by the Liquidator, nonetheless it is a fact of which the Court has to have regard to in considering issue (2)(a). 47. The conclusion I have come to is that, although a liquidator in a voluntary winding up may resign of his own volition, so that, in a typical situation where there is no controversy surrounding the resignation, the Court has no function whatsoever in sanctioning or approving the resignation, in the atypical situation where a liquidator’s decision to resign has arisen in circumstances where he is already before the Court at the behest of a third party, be he a creditor or a contributory, the Court must have jurisdiction at the very least to make a declaration that it is appropriate for the liquidator to resign. Moreover, because of the very unusual circumstances of this case, I have come to the conclusion that the Court should make such a declaration. Accordingly, the order of the Court will include a declaration that it is appropriate for the Liquidator to resign. Lest there be any misunderstanding as to the ramifications of such declaration, it is important to emphasise that its effect is to recognise that the Liquidator has made the correct decision in deciding to resign in the context of the controversial situation in which he finds himself. Its consequences are intended to be limited to such recognition. Issue (2)(b) 48. There is consensus among the parties as to how the Court should determine issue (2)(b), in that counsel for Mr. Maye, the CRH Respondents and Kilsaran are ad idem that the replacement liquidator must be appointed in accordance with s. 270 of the Act of 1963, which is quoted above. In other words, a meeting of the creditors of the company should be convened for the purpose of appointing a liquidator to replace the Liquidator when he has resigned. Unfortunately, the consensus does not extend to the manner in which the meeting should be conducted and, in particular, who should be entitled to vote at the meeting or the mechanism to be deployed to quantify the effect of the vote, whether by reference to the number of creditors in favour of a resolution nominating a liquidator or the value of the debts of the creditors voting for that resolution, which lack of consensus gives rise to difficult questions. 49. One difficult question which the Court has been asked to address has arisen because it was accepted by counsel for the CRH Respondents that at the time of the hearing of the Re-entry Motion they were contingent creditors because, while they had the benefit of orders for costs made by the High Court against Amantiss and Wilbury, the costs had not been taxed and the debts due to those creditors had not been quantified. However, counsel for the CRH Respondents disputed the contention of counsel for Mr. Maye that they were contingent creditors by reason of the order for costs being under appeal. It would be inappropriate for this Court to express any view on that point, because while the appeal has been dismissed by the Supreme Court, the order of the Supreme Court has been stayed pending the determination of the issues before this Court. 50. Apart from that, however, counsel for Mr. Maye submitted that on the basis of the same rationale as informed this Court’s decision that the CRH Respondents and Kilsaran were excluded from voting on the resolutions at the meetings of 24th January, 2012, that is to say, on the basis that those creditors were conflicted in relation to the issue to be voted on, those creditors should also be excluded from voting on the appointment of a replacement liquidator. Counsel for the CRH Respondents, on the other hand, emphasised that what the creditors at the meeting to be convened for the purposes of s. 270 will be voting on is the appointment of a liquidator, who will have a broad range of functions and responsibilities as liquidator of Amantiss and Wilbury. The rationale which informed the Court’s decision on the narrow question which was before the meetings on 24th January, 2012 is not apposite, it was submitted. 51. Counsel for the parties also made comprehensive submissions as to the application of Order 74 of the Rules of the Superior Courts to the meeting of creditors which must be convened for the appointment of the replacement liquidator. First, it was pointed out that the meeting in question will be a “voluntary liquidation meeting” for the purposes of Order 74, by virtue of the application of rule 54(2). Secondly, by virtue of rule 56, rules 58 to 83 inclusive shall apply to that voluntary liquidation meeting “[except] when and so far as the nature of the subject matter or context may otherwise require”. Thirdly, by virtue of rule 57(3) any creditor may summon the meeting under s. 270. For present purposes, it is appropriate to assume that Mr. Maye, as creditor, will summon the necessary meeting of each company on the resignation of the Liquidator. Fourthly, rule 68 outlines the cases in which creditors may not vote. Insofar as it is relevant for present purposes it provides:
52. While the parties sought clarity from the Court as to the conduct of the meeting which will be convened under s. 270, obviously, this Court must exercise caution and avoid usurping the function of the chairman of the meeting or the Court in the event of an appeal from a decision of the chairman. Notwithstanding that, what the Court can say is that, prima facie, on the application of rule 68, if the value of the debts of CRH Respondents and Kilsaran have not been ascertained prior to the convening of the meeting, those creditors will not be entitled to vote on the resolution in relation to the appointment of a replacement liquidator unless they can convince the chairman that the subject matter, the appointment of a replacement liquidator, or the context requires that the application of rule 68 should be excluded. That would be a matter for the chairman of the meeting. 53. I think it is important, however, to emphasise that I consider that the CRH Respondents and Kilsaran are not conflicted in relation to the appointment of a replacement liquidator, as I found that they were conflicted in relation to the resolutions before the meetings of 24th January, 2013, where the questions submitted to those meetings were to ascertain the wishes of the creditors as to the conduct by Amantiss and Wilbury of the Competition Proceedings, in other words, whether they were in favour of or opposed to the continuation of the appeal to the Supreme Court against the CRH Respondents and Kilsaran. The appointment of a replacement liquidator must be approached on the basis that he will conduct the creditors’ voluntary liquidation from his appointment in accordance with law. It seems to me that the issue for the chairman at the meetings convened to give effect to s. 270 will be the proper application of the provisions of Order 74. 54. At the hearing there was some discussion as to whether at a meeting pursuant to s. 270 a resolution as to a creditors’ nominee as liquidator shall be deemed passed when a majority in value, as distinct from a majority in number, of the creditors vote in favour of that resolution. It was submitted on behalf of Mr. Maye that s. 267(3) of the Act of 1963 only applies to the appointment of the first liquidator in a creditors’ voluntary winding up and would have no application to the appointment of a replacement liquidator pursuant to s. 270. Having regard to the fact that all of the creditors of Amantiss and Wilbury are not before the Court on this application, I consider that it would not be proper to express a view on that point. Issue (4) 55. As regards issue (4), there is consensus that the High Court has no role or function in determining whether the replacement liquidator has authority to prosecute the appeal to the Supreme Court. Rather, that is a procedural matter for the Supreme Court. In general, and aside from its jurisdiction under s. 309 of the Act of 1963, the High Court has no supervisory function in relation to the sanctioning of the initiation or prosecution of litigation by a company in a creditors’ voluntary winding up. Issue (5) 56. In view of the answer to issue (4), issue (5) does not arise, as this Court has no jurisdiction to make orders or give directions in relation to the prosecution of the Supreme Court appeal. Issue (6) 57. As regards issue (6), there is consensus that the High Court has no function to make orders or give directions to the replacement liquidator in relation to the initiation of an appeal in the name of Amantiss and Wilbury. To reiterate what has been stated earlier, a liquidator in a creditors’ voluntary liquidation does not have to obtain the sanction of the Court to initiate or prosecute proceedings. The jurisdiction to reinstate or regularise the appeal in the names of Amantiss and Wilbury, which was the subject of the order of the Supreme Court, is vested in the Supreme Court. There is consensus that any necessary application to reinstate or regularise the appeal would have to be made by the replacement liquidator to the Supreme Court. The crucial finding by this Court is that the appeal in the name of Amantiss and Wilbury initiated in September 2012 was initiated with the authority of the Liquidator. Order of the Court APPENDIX Issues as outlined in judgment of 15th July, 2013 ([2013] IEHC 332)
(2)(a) Does the Court have jurisdiction to sanction the resignation of the Liquidator as liquidator of Amantiss and Wilbury and, if so, should the Court exercise that jurisdiction? (2)(b) If the Court sanctions the resignation of the Liquidator, or if the (2)(b) Liquidator resigns without the benefit of such sanction, what steps should be taken to appoint a replacement liquidator to Amantiss and Wilbury? (3) If the Court determines that Mr. Maye did not have authority to initiate and prosecute the said Supreme Court appeal, does the Court at this point in time have jurisdiction to make orders and give directions to allow the said appeal to proceed in a lawful manner? (4) If the Court determines that Mr. Maye did have authority to initiate the said Supreme Court appeal, will a person who replaces the Liquidator as liquidator of Amantiss and Wilbury have authority to prosecute the said appeal and, if so, does the Court have jurisdiction to make orders and give directions to allow the said appeal to proceed in a lawful manner? (5) If the Court has the jurisdiction referred to in either issue (3) or issue (4), what orders should the Court make and/or what directions should the Court give in relation to the prosecution of the said Supreme Court appeal? (6) If the Court determines that it does not have jurisdiction to make orders or give directions in relation to the prosecution of the said Supreme Court appeal, as a matter of law, does a replacement liquidator have power to initiate an appeal against the order of the High Court dismissing the Competition Proceedings and to seek an enlargement of time for so doing from the Supreme Court and, if so, how is that power to be exercised? |