Amantiss Enterprises Ltd & Anor -v- Companies Acts 1963-2013 [2013] IEHC 21 (22 January 2013)

Judgment Title: Amantiss Enterprises Ltd & Anor -v- Companies Acts 1963-2013

Neutral Citation: [2013] IEHC 21

High Court Record Number: 2012 696 COS

Date of Delivery: 22/01/2013

Court: High Court

Composition of Court:

Judgment by: Laffoy J.

Status of Judgment: Approved

Neutral Citation [2013] IEHC 21

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 22nd day of January, 2013.

Background
1. The companies named in the title hereof, Amantiss Enterprises Limited, (Amantiss) and Wilbury Limited (Wilbury) are each being wound up in a creditors’ voluntary liquidation which commenced on 1st April, 1994. Mr. Des Donegan (the Liquidator) is the Liquidator in both liquidations. In 1996, after the liquidations had commenced, proceedings were initiated in the High Court between Framus Limited, Amantiss (in voluntary liquidation) and Wilbury (in voluntary liquidation), as plaintiffs, and CRH plc, Irish Cement Limited, Roadstone Provences Limited, Roadstone Dublin Limited, Tradburn Limited, Readymix plc, Kilsaran Concrete Products Limited and CPI Limited, as defendants (Record No. 1996/10658P). By order of the Court made on 11th October, 2011 those proceedings (the Competition Proceedings) were entered in the Competition List. Around the same, time motions were brought on behalf of all of the defendants in the Competition Proceedings to have those proceedings dismissed on the grounds of inordinate and inexcusable delay. The motions were heard by Cooke J., who delivered judgment on 19th July, 2012, in which he held that the defendants’ motions should be allowed and that the Competition Proceedings should be dismissed. By order of the Court (Cooke J.) made on 26th July, 2012 the Competition Proceedings were dismissed and it was ordered that the defendants recover their costs of the proceedings, including reserved costs and costs of discovery, if any, against the plaintiffs.

2. In September 2012, following perfection of the order made on 26th July, 2012, the Solicitors who had acted for all three plaintiffs in the Competition Proceedings, Philip Lee, filed in the office of the Supreme Court and served on all of the defendants a notice of appeal against the order of 26th July, 2012 on behalf of the three plaintiffs, which will be collectively referred to as “the appellants” below. The appeal is pending in the Supreme Court.

3. The order of 26th July, 2012 provided that the order (including the costs element thereof) should be stayed until after 10th October, 2012. There is pending in the Supreme Court an application on behalf of the appellants to continue this stay until the appeal is determined. As I understand the position, the defendants in the Competition Proceedings, being the respondents on the appeal, have agreed to the stay remaining in place until certain applications which are now pending before the Supreme Court in relation to the appeal are determined.

4. While there is no affidavit from the Liquidator before this Court on the application to which this judgment relates, the position of the Liquidator set out in the outline legal submissions on his behalf put before the Court is that, insofar as the appeal has been initiated and prosecuted on behalf of Amantiss and Wilbury, this has been done without the authority of the Liquidator, although the Liquidator recognises that this is a contentious issue. In any event, the first five defendants to the Competition Proceedings (the CRH Respondents) have brought an application to the Supreme Court to strike out the appeal on the basis that it was “purportedly” brought on behalf of Amantiss and Wilbury. Similar applications have been brought on behalf of two of the remaining three defendants/respondents and it has been made clear that the third remaining defendant/respondent is supporting all of those applications. The applications to strike out the appeal are returnable before the Supreme Court on 25th January, 2013.

5. It is because the Liquidator’s position is that he did not authorise the bringing of the appeal on behalf of Amantiss and Wilbury and the position he has adopted that the appeal is not in the best interests of the creditors of those companies that the application to which this judgment relates has been brought in this Court.

The application
6. The application was initiated by an originating notice of motion dated 18th December, 2012, which, with the leave of the Court, was returnable on 20th December, 2012. The applicant on the application is Seamus Maye (Mr. Maye), on the basis that he is a creditor of both Amantiss and Wilbury. He is also a director of Framus Limited. The reliefs sought on the originating notice of motion, which is directed to the Liquidator, are as follows:

(a) orders pursuant to s. 309 of the Companies Act 1963 (the Act of 1963) directing that –

(i) a meeting of the creditors of Amantiss for the purposes of ascertaining the wishes of the creditors as to the conduct by or on behalf of Amantiss of the appeal to the Supreme Court and associated matters, and

(ii) a meeting of the creditors of Wilbury for the purposes of ascertaining the wishes of the creditors as to the conduct by or on behalf of Wilbury of the appeal and associated matters, be called, held and conducted in such manner as the Court shall direct and that a person to be specified be appointed to act as chairman of each meeting and to report the results thereof to the Court;

(b) if necessary, an order pursuant to s. 280 of the Act of 1963 determining questions arising as to the conduct of the appeal by or on behalf of Amantiss and Wilbury;

(c) if necessary, and in the alternative, an order pursuant to s. 277 of the Act of 1963 removing the Liquidator as liquidator of Amantiss and of Wilbury on cause shown and appointing another person as liquidator to each of those companies; and

(d) if necessary, an order pursuant to s. 280 of the Act of 1963 and/or the inherent jurisdiction of the Court directing the Liquidator, as liquidator of Amantiss and of Wilbury, to prosecute the appeal on behalf of Amantiss and Wilbury.

7. When the application came before the Court on 20th December, 2012, counsel for the Liquidator indicated that, while the Liquidator had no difficulty convening meetings of the creditors of Amantiss and Wilbury, he was concerned as to the status of the defendants to the Competition Proceedings, being the respondents on the appeal, having regard to the existence of the provisions in the order of 26th June, 2012 awarding them costs against, inter alia, Amantiss and Wilbury. The Court directed that an issue be tried as to whether the defendants in the Competition Proceedings stand as creditors in the liquidation of Amantiss and in the liquidation of Wilbury enabling them to attend and vote at any creditors’ meeting. 18th January, 2013 was the date fixed for the hearing of that issue.

Events prior to the hearing of the issue
8. On 16th January, 2013 the Liquidator gave notice of the summoning of a meeting of the creditors of Amantiss and of the summoning of a meeting of the creditors of Wilbury, both meetings to be held on 24th January, 2013 in Dublin, the meetings being for the purposes of ascertaining the wishes of the creditors as to the conduct by or on behalf of the relevant company of the appeal and associated matters. The position adopted on behalf of Mr. Maye at the hearing on 18th January, 2013 was that the reliefs sought under s. 309 were no longer necessary, although the position of Mr. Maye in relation to the necessity to prosecute the application in relation to the other reliefs sought on the application at a later stage was reserved.

9. Although each of the respondents to the appeal was given liberty to participate in the hearing of the issue, by letters to Philip Lee, Solicitors, which have been put before the Court, the solicitors for the sixth respondent, the solicitors for the seventh respondent and the solicitors for the eight respondent, indicated that they did not intend to participate in the hearing of the issue but would adhere to whatever decision the Court makes as to their respective clients’ status as a creditor of Amantiss and Wilbury and related voting rights.

10. As regards the CRH Respondents, they did participate in the hearing of the issue, having filed an affidavit sworn by James Andrew Lenny, a solicitor and a partner in the firm of Arthur Cox, Solicitors, who are on record for the CRH Respondents, which was sworn on 16th January, 2012 and also legal submissions. The position adopted on behalf of the CRH Respondents was that they have the status of creditors and they are entitled to attend the meetings of creditors of Amantiss and Wilbury summoned by the Liquidator and to have their views as creditors, whether contingent or otherwise, on the conduct of the appeal on behalf of Amantiss and Wilbury expressed at the meetings and conveyed to the Court following the meetings.

The Liquidator’s current position
11. Given that the position of the CRH Respondents is diametrically opposite to the position of Mr. Maye, in that it was submitted on the latter’s behalf that –

(a) the respondents on the appeal are not creditors with an entitlement to vote at the meetings, being at best contingent creditors, and,

(b) in any event, there being a clear conflict between the interests of the respondents on the appeal and the general body of the creditors of the companies, as a matter of equity, justice and common sense, the respondents should not be allowed to express their views at the meetings,

it is hardly surprising that counsel for the Liquidator made it clear that the Liquidator wants clarity on how the meetings he has summoned should be conducted. In his submissions, counsel for the Liquidator did not come down on either side in the controversy between Mr. Maye, on the one hand, and the CRH Respondents, on the other hand, as to the conduct of the meetings. However, he did draw the Court’s attention to the settled law on the status of a third party who obtains an order for costs against a company in liquidation in proceedings initiated after the liquidation commenced and, in particular, he referred the Court to the following observations of McCarthy J. delivering judgment in the Supreme Court in Comhlucht Páipéar Ríomhaireachta Teo v. Údarás na Gaeltachta [1990] 1 I.R. 320 (at p. 331), which was also relied on by counsel for the CRH Respondents:

“The overwhelming line of authority establishes that in the cases such as the present, where an action is brought after liquidation, the costs of a successful litigant against the company appear to rank in priority to all other claims. As a simple proposition, it would seem supported in principle. It would be a great injustice if a company were free, after liquidation, to maintain an action for the benefit of the general body of creditors and, if unsuccessful, successfully contend that the costs of the successful litigant against the company should only rank

pari passu

with the claims of the creditors.”

12. Although their priority status over the claims of other creditors is not in doubt if they remain in place, the respondents’ claims against Amantiss and Wilbury for costs are subject to a range of imponderables, namely, whether the respondents’ motions to strike out the appeal on behalf of Amantiss and Wilbury will be successful, and, if not, whether the appellants’ motion to continue the stay will be successful and, most importantly, whether the appeal will be successful. That all of those imponderables are matters for determination by the Supreme Court on the applications now pending before the Supreme Court, illustrates that this Court, on this application, must avoid the trap of falling into a classic “chicken and egg” situation.

The law and its application
13. As I have already recorded, the Court has had the benefit of written legal submissions on behalf of Mr. Maye, the Liquidator and the CRH Respondents and there was a stenographer present at the hearing recording, inter alia, the oral submissions made on behalf of those parties. As there is a record of the submissions, I do not consider it necessary to outline them here.

14. Although I am concerned only with the issue as to the conduct of the meetings summoned by the Liquidator, I do consider it appropriate to make some general observations. In his grounding affidavit sworn on 18th December, 2012, Mr. Maye has outlined his reasons for seeking the relief he has sought on the notice of motion. First, he has asserted that he does not accept the Liquidator’s contention that the appeal was issued without the authority of the Liquidator. That is disputed by the CRH Respondents. This Court has no function whatsoever in relation to that dispute. He has also asserted that he does not accept the Liquidator’s contention that the appeal is not in the best interests of the creditors and he has summarised his reasons for contending that the withdrawal of the appeal by Amantiss and Wilbury is not in the best interests of the creditors. Again, this Court has no function in relation to that dispute. He also contended that it is not open to the Liquidator to decide, unilaterally and without consultation with the creditors, where the creditors’ best interests lie, which is tied in with his belief as to what is in the best interests of the creditors. As the Liquidator has summoned meetings of the creditors of both companies, all this Court is now asked to do is to address the manner in which the meetings should be conducted. Notwithstanding that it does not arise for determination at this juncture, I feel constrained to say that I cannot see how this Court could entertain the element of the application outlined at (d) in para. 6 above, under which Mr. Maye seeks an order compelling the Liquidator to prosecute the appeal, having regard to the fact that there are motions by the respondents pending in the Supreme Court to strike out the appeal. Similarly, I cannot see how, in the circumstances which now prevail, this Court could entertain the elements of the application referred to at (b) and (c) in para. 6 above.

15. Sub-section (1) of s. 309 of the Act of 1963 provides as follows:

“The court may, as to all matters relating to the winding up of a company, have regard to the wishes of the creditors or contributories of the company, as proved to it by any sufficient evidence, and may, if it thinks fit, for the purpose of ascertaining those wishes, direct meetings of the creditors or contributories to be called, held and conducted in such manner as the court directs, and may appoint a person to act as chairman of any such meeting and report the result thereof to the court.”

Sub-section (2) provides that, in the case of creditors, regard shall be had to the value of each creditor’s debt.

16. As is pointed out in MacCann & Courtney “Companies Acts 1963 – 2012”, the provisions of s. 309 have not been given much consideration to date. Section 309 was referred to in the context of adjudicating on a petition to wind up a company in Re Genport Limited [1996] IEHC 34, in which McCracken J. observed that under s. 309 he was entitled to take into account, inter alia, the views of four trade creditors of the company, being the only trade creditors who had appeared on the hearing of the petition, who were opposed to the making of a winding up order.

17. The matter on which Mr. Maye requires the Liquidator to ascertain the wishes of the creditors at the meetings which have been summoned is whether they support the position of Mr. Maye or the position of the Liquidator in relation to the prosecution of the appeal. In the last paragraph of his grounding affidavit, having referred to earlier assertions on his part as to “the stated position of the majority of trade creditors”, that is to say, that they oppose the position adopted by the Liquidator, Mr. Maye averred that it would be just and beneficial that this Court should grant the relief sought in the notice of motion. Mr. Lenny, in his replying affidavit, has asserted that there is no evidence to support Mr. Maye’s assertion that the majority of trade creditors of both companies oppose the Liquidator’s position. I express no view on that factual dispute because at present this Court is not required to determine any matter to which it is relevant.

18. In determining the core matter which is pending before it and which has given rise to this application, namely, whether the appeal brought on behalf of Amantiss and Wilbury should be struck out, the Supreme Court may or may not exercise the discretion conferred on it by s. 309 of having regard to the wishes of the creditors of those companies. Insofar as the core matter involves a contest, it is a contest between the respondents, who are the moving parties and whose wishes, as such, are quite clear, to have the appeal struck out, on the one hand, and Amantiss and Wilbury, as represented by the Liquidator, who, in turn, represents the interests of the creditors and the contributories of each, with whom he may or may not be ad idem on the core matter, on the other hand. If the wishes of the respondents’ opponents, if they exist, in that contest are to be relevant in determining the contest, it would make absolutely no sense to include the respondents, on the basis that they are claimants under the order for costs against Amantiss and Wilbury which they are appealing, among the class designed to identify their opponents. If any application of s. 309 in the context of the contest on the core issue is to be meaningful, the creditors of Amantiss and Wilbury for that purpose cannot include any of the respondents, because a clear conflict of interest exists between the respondents and any creditor among the general body of creditors who opposes the strike-out motion on that contest.

19. Part X of Order 74 of the Rules of the Superior Courts (the Rules) contains rules (rules 50 to 83 inclusive) in relation to general meetings of creditors and contributories in a winding up by the Court and also of creditors in a creditors’ voluntary winding up. Section 309 is referred to in rule 54(1) and in rule 55(1), but on each occasion the rule regulates the activity of “the Official Liquidator” and obviously relates to a situation in which a company is being wound up by the Court. On a careful reading of Part X, it seems to me that it does not expressly address a situation in which the Court may direct a meeting be held for the purposes of s. 309 in a voluntary liquidation. However, the Court can clearly invoke its inherent jurisdiction to supply that lacuna, if it exists.

20. The provision of the Rules which was of most controversy on the hearing of the application was Order 74, rule 68, which provides that a creditor shall not vote in respect of any unliquidated or contingent debt or any debt the value of which is not ascertained. The value of the claims of the respondents against Amantiss and Wilbury in respect of the costs of the Competition Proceedings has not been ascertained, although Mr. Lenny has exhibited in his affidavit an estimate of the costs of the CRH Respondents prepared by Cyril O’Neill, Legal Costs Accountants, which estimates the costs of the CRH Respondents pursuant to the order of 26th July, 2012 at €533,895.14. While subs. (1) of s. 309 gives the Court a discretion whether to have regard to the wishes of the creditors of the company, the Court is mandated by subs. (2) to have regard to the value of each creditor’s debt, if it exercises the discretion. Accordingly, it seems to me that the Court cannot apply s. 309 to creditors unless the quantum of the creditors’ claim has been ascertained. Having said that, I wish to make it clear that the primary reason for excluding the respondents from voting at the meetings on 24th January, 2013 is because of their conflicted position in relation to the matter which is to be voted on, as outlined earlier.

21. There is a considerable degree of flexibility in s. 309 as to how the Court may obtain the relevant information to form a view on the wishes of the creditors. The information may come by evidence, presumably, by affidavit evidence or by a creditor attending the hearing of an application, for example, appearing at the hearing of a petition to wind up the company which has been advertised in accordance with the Rules. The alternative approach is for the Court to direct the convening of a meeting of the creditors. If such a meeting is convened, it seems to me logical that the views of the creditors should be ascertained by a vote on the matter in respect of which the meeting was called. Accordingly, I consider it appropriate that votes should be taken at the meetings to be held on 24th January, 2013.

22. Finally, as the Liquidator decided to summon the meetings of Amantiss and Wilbury prior to the hearing of the application, there was no debate about, and the Court has made no determination on, the entitlement of a creditor to bring an application requiring the Court to direct a meeting in accordance with s. 309. It is not to be implied from this judgment that I consider that there is such an entitlement. That issue is for another day.

Directions in relation to conduct of meetings
23. The following directions apply to the conduct of the meetings to be held on 24th January, 2013:

(a) The liquidator of the company shall be the chairman of the relevant meeting.

(b) For the purposes of the conduct of each meeting, the creditors of Amantiss or Wilbury, as the case may be, shall not include any of the defendants in the Competition Proceedings.

(c) The purpose of each meeting is to ascertain the wishes of the creditors of the relevant company as to the conduct, on behalf of that company, of the appeal against the order of 26th July, 2012 in the Competition Proceedings. That matter shall be put to the vote of the creditors who attend either in person or by proxy.

(d) The entitlement to be represented by proxy shall be governed by rules 74 to 83 inclusive of Order 74 of the Rules, subject, having regard to the time constraint, to the qualification that an instrument of proxy may be presented to the Liquidator at the meeting and need not be lodged on the previous day.

(e) The chairman shall cause minutes of the proceedings at each meeting to be drawn up and the minutes shall be signed by him.

(f) The chairman shall prepare a report of the result of the meeting which follows Form No. 19 of Appendix M of the Rules and lists the name, address and amount of the claim of each creditor who voted at the meeting either in person or by proxy and how that person voted.

(g) The Liquidator shall file an affidavit exhibiting the minutes and the report of the result of each meeting in Court in these proceedings within seven days of the meeting.

(h) For the avoidance of doubt, a representative of the CRH Respondents shall be entitled to attend each meeting as an observer, but shall not be entitled to participate in the meeting.

Balance of application
23. I intend adjourning the balance of the application, including the issue of the costs of the application, generally with liberty to re-enter. Any party, including the CRH Respondents, which I am treating as notice parties, may re-enter the application when the matters currently before the Supreme Court have been finally determined.

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