Supreme Court of Ireland Decisions

1. These proceedings were begun by way of a petition by Orlaford Limited (hereafter “Orlaford”) in which it sought the restoration to the Register of Companies of the company named in the title (hereafter “Deauville”). It then brought a notice of motion in which Christopher Wetherhill, Margaret Every and Joseph Kelly were named as respondents as the last known directors of Deauville. That notice of motion also sought orders declaring that the officers of Deauville should be liable for any debts or liabilities incurred by or on behalf of Deauville and an order directing the respondents to deliver all outstanding annual returns required by the relevant legislation to the Registrar of Companies (hereafter “the registrar”). The latter and the Revenue Commissioners were notice parties to the application.

2. Orlaford brought the application because it claimed to be a creditor of Deauville. The application was resisted on three grounds by the respondents: first, that the application should have been brought in the Circuit Court, secondly, that Orlaford were not a creditor of Deauville within the meaning of the relevant legislation and, thirdly, that they had not in any event adduced sufficient evidence to satisfy the court that their claim was bona fide . The High Court (O’Higgins J) found in favour of Orlaford on all three grounds and made an order that Deauville be restored to the register and that the respondents within six months deliver all outstanding annual returns to the registrar and all outstanding statements and tax returns to the Revenue Commissioners. From that judgment and order the respondents have now appealed to this court.

3. The first ground on which the order was resisted raises a somewhat difficult issue of statutory construction. It is not in dispute that, as the result of relatively recent legislation, the application could have been made in the Circuit Court: it was contended, however, on behalf of the respondents that that was the only court in which it could have been made. Before setting out the text of the statutory provisions and the submissions advanced by the parties, the relevant legislative history should be recalled.

4. Both the Principal Act and the 1982 Act contained provisions for an application to the court by the company or any creditor or member of the company, who feels aggrieved by its having been struck off, with a view to having the name of the company restored to the register. That procedure is still available following the amendments introduced by s.46 of the 1999 Act, but the application, where the company was struck off for failure to make returns or deliver statements, must now be made on notice, not merely to the registrar, but also to the Revenue Commissioners and the Minister for Finance. The procedure in the case of a member, officer or creditor of the company is prescribed by s.12B(3) of the 1982 Act as inserted by s.46 of the 1999 Act. The registrar may also apply for the restoration of the company to the register and the procedure in that case is prescribed by s.12B(7) of the 1982 Act as inserted by s.46.

5. S.12B(3) of the 1999 Act provides that

6. S.S.(9) of s.12B, inserted by s.46, which has given rise to the difficulty in this case, provides that

7. It is submitted on behalf of the respondents that the effect of s.s.(9) is that an application by a creditor or the registrar under s.12B must be made to the Circuit Court. It is submitted on behalf of Orlaford that the effect of s.s.(9) is to enable a creditor or the registrar to make an application under s.12B to the Circuit Court and that it does not prevent them from making an application under that section to the High Court.

8. On behalf of the respondents, Mr. Oísín Quinn submitted that the construction of s.s.(9) contended for by Orlaford could not be reconciled with the use of the expression “where such an application is made by any other person”. If, as urged on behalf of Orlaford, the provision was intended to be enabling only and not restrictive, those words would have been omitted.

9. On behalf of Orlaford, Mr. Denis McDonald SC., submitted that s.s.(9) was clearly intended to give creditors and the registrar the right to apply to the Circuit Court, while requiring the application in any other case to be made to the High Court: that, he submitted, was what was intended by the use of the expression “where such an application is made by any other person”. He submitted that, at best from the respondent’s point of view, the provision was ambiguous and, accordingly, the court, in accordance with well established principles of statutory construction, should have regard to other provisions of s.12B. He submitted that s.s.(10) and (11), indicating in which circuit the application was to be made, used in each instance the words “an application ....... to the Circuit Court” which was not consistent with a requirement that such applications could only be made to that court. He also submitted that the construction urged on behalf of the respondents would have the anomalous consequence that an application by a creditor under s.311(8) of the Principal Act in the case of a defunct company could be made to the High Court: it was only in the case of a default by the company in making returns having occurred that the creditor, on the respondent’s construction, was confined to applying to the Circuit Court.

10. Mr. Lyndon McCann on behalf of the registrar and Mr. Daniel O’Keeffe SC on behalf of the Revenue Commissioners supported the submissions advanced by Mr. McDonald.

11. The first matter to be resolved is whether s.s.(9) is incapable of being construed in accordance with normal principles of statutory construction in the manner contended for on behalf of Orlaford. If the words used, construed in their normal and literal sense, must be read as precluding a creditor or the registrar from making an application under the section to any court other than the Circuit Court, then the provision must be so construed, however unlikely it may be that that was the intention of the Oireachtas. If, however, it is also at least capable of being read as enabling a creditor or the registrar to apply either to the High Court or the Circuit Court, it becomes necessary to examine the statutory context in which the subsection appears in order to ascertain what the intention of the Oireachtas was.

12. The subsection is not only capable of being read in the manner urged by the respondents: that is also the meaning which, as a matter of first impression, one would attach to s.s(9). If it was intended to give a creditor or the registrar the option of applying either to the High Court or the Circuit Court, one would have expected the words “where such an application is made by any other person” to have been omitted and the word “includes” used instead of the word “means”.

13. It by no means follows, however, that that is the only construction of which the subsection is capable. If the intention was to make the Circuit Court the only court to which a creditor or the registrar was to apply, it is difficult to understand why the opening words “ without prejudice etc.,” were inserted in the section: the same result could have been achieved by simply providing that

14. The addition of the adverb “exclusively” after “means” would also have put the matter beyond doubt.

15. It is beyond argument that the subsection was, at the least, intended to enable a creditor or the registrar to apply under the section to the Circuit Court. It is also beyond argument that the facility thus afforded to those parties was not intended to apply to any other person and that may have been the reason for the use of the opening words “without prejudice etc.,”. That would suggest that the word “means” could be read in two ways: either as “means exclusively the Circuit Court” adopting the respondents’ construction, or “means, in addition to the High Court, the Circuit Court”, adopting the construction urged by Orlaford.

16. I am satisfied that, while the construction urged by the respondent might seem, at first sight, that which was intended by the draftsman, an analysis of the sub-section suggests that it is, at the least, ambiguous and capable of the construction urged by Orlaford. It is, accordingly, necessary to consider the context in which the provision appears in order to see whether it throws any further light on the possible intention of the Oireachtas.

17. It is obvious that the Oireachtas thought it desirable that the registrar should be in a position, if it seemed a convenient course, to make an application in the Circuit Court where it was considered appropriate to have a company which had been in default in making returns restored to the register. One can see good reasons why a similar facility should be afforded to persons in the position of creditors who had not been in any way in default. One can also understand why it was not thought necessary to afford such a facility to members or officers of the company which had been in default. But there seems no reason - and none has been suggested - why the legislature, while enabling creditors and the registrar to avail of what might be a more convenient forum, should at the same time have chosen to deny them access to a forum, i.e., the High Court, which, depending on the circumstances, could have been as convenient, if not more convenient, than the Circuit Court.

18. That would incline me to the view that the construction contended for by Orlaford is more likely to have been the construction intended by the Oireachtas. That view is strengthened when one has regard to the provisions of s.s.(10) and (11) which are as follows:

19. If the construction contended for by the respondents is correct, then since the relevant application could not be made to any other court, the words “to the Circuit Court” are surplusage. It is, of course, possible that that is all they are, but one would not normally assume, in the absence of any other explanation, that the draftsman used words which were entirely superfluous.

20. It is also noteworthy that s.12C of the 1982 Act, as inserted by s.46 - which enables the registrar to restore the company to the register on the application of a member or officer subject to certain preconditions being met - begins with the words

21. A creditor is, accordingly, still entitled to obtain an order from the High Court for the restoration of a company to the register, where the court is either satisfied that the company was carrying on business at the time it was struck off or “otherwise that it is just” that the company be restored.

22. There seems no reason why a creditor should be entitled to obtain from the High Court an order restoring a company to the register because it is “just” that this should be done, where the company is simply defunct, but should be precluded from obtaining such an order from the High Court where the company has been struck off for failing to make returns. No principled reason has been suggested for requiring the application to be made only in the Circuit Court in the latter instance, other than the singularly unconvincing ground that the Oireachtas may have considered an application under s.311(8) as being necessarily so complex as to necessitate an application to the High Court.

23. As I have already said, if the language of s.s.(9) clearly and unambiguously confined the jurisdiction in the case of an application by a creditor or the registrar to the Circuit Court, then that would have to be given effect to, even thought it was difficult to reconcile with the provisions to which I have just referred. Since, however, s.s.(9) is, at the least, capable of either construction, I am satisfied that, when the subsection is placed in its appropriate statutory context, it becomes clear that the intention of the Oireachtas was more likely to have been to enable the application to be brought either in the High Court or the Circuit Court.

24. There was some discussion in the course of the written and oral submissions of the decision of this court in Tormey -v- Ireland [1985] IR 283 in which it was held that it was within the competence of the Oireachtas to commit certain matters or questions to the exclusive jurisdiction of the District Court or the Circuit Court. However, it is unnecessary to consider the implications of that decision and whether it effectively overruled sub silentio the earlier decision of the High Court in R -v- R [1984] IR 296. It is sufficient to say that, assuming that it was within the competence of the Oireachtas to commit a jurisdiction of this nature exclusively to the Circuit Court, it has not been demonstrated in the present instance that the Oireachtas availed of their competence in that area so to legislate.

25. It should also be pointed out that a similar view to that taken by O’Higgins J in the present case had been expressed by O’Donovan J in Re Nafta Product Operation Limited (Unreported: 2000/167.) I am satisfied that the decisions of both the learned High Court judges in that case and in the present case were correct in point of law.

26. The next question that arises is as to whether Orlaford was at the date of the application to the High Court a “creditor” within the meaning of s.12B(3) of the 1982 Act as inserted by s.46. It is not in dispute that, at the time the petition was presented to the High Court, Orlaford had instituted proceedings against Deauville in the Supreme Court of Bermuda claiming damages on the grounds that Deauville, with intent to injure Orlaford, conspired with others to cause a breach of a licence agreement entitling Orlaford to receive payment of royalties in respect of the use of what was described as the “Rogers patent”. The purpose of the application pursuant to s.12(B)(3) was to enable Orlaford to pursue that action against Deauville in the court in Bermuda.

27. It was submitted on behalf of the respondents that Orlaford were, at best, no more than a contingent or prospective creditor of Deauville and, accordingly had no locus standi to present the petition. In support of that submission, it was pointed out that s.215 of the Principal Act, in defining the persons who may petition the court for the winding up of a company uses the expression

28. It was submitted that if contingent or prospective creditors were to be entitled to avail of s.12(B)(3) similar wording would have been used and that s.1(3) of the 1999 Act provides that the Companies Acts, 1963 - 1999, are to be construed as one.

29. Unless there were authority to the contrary, I would be inclined to the view that the word “creditor” in s.12(B)(3) should be read as extending to contingent or prospective creditors. It would seem unjust that the question whether a person is entitled to have the company restored to the register for the purpose of recovering a judgment against them should be determined by whether their claim against the company is for a liquidated sum - in which case they would unarguably be a “creditor” - or takes the form of a claim for unliquidated damages.

30. Happily, however, there is authority which supports that view. In In Re Harvest Lane Motor Bodies Limited [1969] IR 457, Megarry J, as he then was, declined to accept the more restrictive construction of the word “creditor” in the corresponding English legislation contended for by the respondents in this case.

31. In his judgment, Megarry J, having referred to some earlier authorities which he considered had not entirely resolved the issue, stated his conclusions as follows

32. It will be seen that the wording of the English provision is identical to the wording of s.12(3)(B) of the 1982 Act with which we are concerned.

33. I would have no hesitation in adopting the reasoning of Megarry J in that judgment. The only feature of the decision which distinguishes it from the present case is that, at the time the company was struck off, the petitioner’s action against the company was in being. However, it is clear from the subsequent decision of the Court of Appeal in City of Westminster Assurance Company Limited -v- Registrar of Companies and Another (Unreported: Judgments delivered 28th June 1996) that in that jurisdiction the same reasoning will be applied even though the proceedings were not in existence at the time the company was struck off. In that case the application to restore the company to the register was made by a landlord who was seeking payment of arrears of rent from a guarantor. The application was granted in the High Court and that decision was upheld on appeal. In the course of his judgment, Millett LJ referred to a distinction which was claimed to exist between that case and Re Harvest Lane Motor Bodies Limited : at the date when the company was struck off the register, the landlord had no cause of action against the company since no debt was then due. Holding that the principle was the same, Millett J said:

34. It should also be pointed out that, in Harvest Lane Motor Bodies Limited , Megarry J referred to the provisions of s.224(1) of the English Companies Act 1948 which defines the persons who may make an application to a court for the winding up of a company in the same terms as s.215 of our Principal Act. Megarry J was clearly of the view that the absence of similar words from the English section corresponding to s.12(B)(3) did not preclude the court from adopting a reasonably wide construction of the word “creditor” if justice so required and I am satisfied that this is also the law in this jurisdiction.

35. It remains to be noted that a similar view was taken in the High Court by Barr J in Industrial Glazing Systems Limited (Unreported : 6th November, 2000) although no written judgment is available in that case.

36. Since the events which are claimed to give rise to the cause of action are alleged to have happened before April 18th, 1999, the day on which Deauville was struck off, it is clear, that adopting the reasoning of the English courts in the two cases to which I have referred, Orlaford should be regarded as being a “creditor” for the purposes of the application to restore Deauville to the register.

37. The third ground relied on by the respondents is that these proceedings are not being bona fide maintained by Orlaford against Deauville or, at the least, that there was insufficient evidence before the High Court to enable it to reach a conclusion that the proceedings were being bona fide maintained.

38. In the affidavit grounding the application to the High Court, Robert Paul Edmonds, a Canadian barrister and solicitor, said that his firm acted for Orlaford and co-ordinated their legal affairs on a world wide basis. In that affidavit, he said that Orlaford had at all material times the exclusive right to receive royalties on sales in the United States and elsewhere of footwear utilising a system of lights invented and patented by one Nicholas A Rogers. This is the “Rogers patent” to which I have already referred. He said that a company incorporated in the State of New York called BBC International Limited (hereafter “BBC”) had obtained an exclusive licence to utilise the Rogers patent on a world wide basis, subject to its obligations to pay royalties to Orlaford pursuant to a licence agreement. He said that in 1995 Orlaford discovered that BBC had infringed the patent and acted in breach of the licence agreement in that BBC, with the assistance of others, wrongfully copied the Rogers patent and then, with the assistance of others, wrongfully caused lighted footwear to be manufactured and sold without paying Orlaford the royalties to which it was entitled under the licence agreement. As a result, he said, Orlaford brought a successful claim for patent infringement against BBC and others in the United States District Court for the Western District of Wisconsin in 1996 and were awarded US$5.6 million. He further deposed that, in the course of the Wisconsin proceedings, Orlaford discovered that Deauville had obtained a licence from BBC and together with others had conspired and induced BBC, for the financial benefit of Deauville and others, to commit breaches of the licence agreement which would result in the avoidance of payment of royalties to Orlaford.

39. In a replying affidavit, the second named respondent said that Deauville had become an “inactive company” by December 1998. She also said that she was not aware on what basis Mr. Edmonds could claim to have personal knowledge of the matters to which he referred in his grounding affidavit. She said that

40. There followed a further affidavit on behalf of Orlaford sworn by David Bruce Buchanan, another barrister and solicitor in Canada also acting for Orlaford. He said that he and Mr. Edmonds had conducted detailed investigations on behalf of Orlaford in relation to the alleged involvement of Deauville and that they had “clear and direct knowledge” of the matters referred to in the petition.

41. In the course of his affidavit, Mr. Buchanan exhibited the original licence agreement which he said had been entered into between the inventor and BBC, including a copy of the patent, which licence, he averred, had been duly assigned to Orlaford. He also exhibited extracts from a deposition on oath in earlier proceedings by Donald Lee, a senior officer and director of BBC, made on 26th August 1996. In the course of that deposition, Mr. Lee gave the following answer:

42. Mr. Quinn submitted that there was not sufficient evidence in the affidavits of Mr. Edmonds and Mr. Buchanan to justify an inference that the proceedings instituted by Orlaford would probably be successful, which, he urged, was the appropriate test. In particular, the affidavits had not exhibited any documentation to support the claim that Orlaford had been assigned the interest of Mr. Rogers in the licence agreement with BBC.

43. Mr. Quinn relied, in support of this submission, on the decision of Kenny J, sitting as a High Court judge, in Re Nelson Car Hire Limited (107 ILTR 97). In that case, the Revenue Commissioners had presented a petition under s.310 of the Principal Act for an order declaring the dissolution of Nelson Car Hire Limited void. The purpose of seeking the order was that they might assess the company for income tax and corporation profits tax on the profit made from the purchase and sale of land which, they contended, was an adventure in the nature of trade.

44. S.310 of the Principal Act (1) provides that

45. Kenny J, while holding that the Revenue Commissioners were not creditors of the company within the meaning of s.310, as no assessments had been raised while the company was still on the register, was satisfied that they would be “persons interested” within the meaning of the section if they established that they had “a reasonable prospect of success” in a claim for tax against the company if it was restored to the register and an assessment made on it. He said

46. Assuming that the test adopted by Kenny J in that case is also appropriate where a court is deciding whether “it is just” that the company should be restored to the register, I have no doubt that it was satisfied by Orlaford in this case. The lawyers who conducted inquiries on their behalf into the alleged infringement of their intellectual property rights have sworn affidavits in which they have said that Deauville were involved in such activity and they have exhibited the relevant depositions in earlier proceedings in support of those averments. It is clear that the learned High Court judge was entitled to conclude that, at the least, the claim by Orlaford might succeed and that there was nothing to indicate that the proceedings were frivolous or vexatious or were not being bona fide maintained by Orlaford.

47. I would dismiss the appeal.