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Amantiss Enterprises Ltd. Re [1999] IEHC 74; [2000] 2 ILRM 177 (21st December, 1999)
THE
HIGH COURT
No.
1999 197 COS
IN
THE MATTER OF AMANTISS ENTERPRISES LIMITED (IN VOLUNTARY LIQUIDATION)
AND
IN THE MATTER OF THE COMPANIES ACTS 1963 TO 1990
AND
ALSO IN THE MATTER OF THE HIGH COURT 1966 NO 10658p
BETWEEN
FRAMUS
LIMITED AND AMANTISS ENTERPRISES LIMITED (IN VOLUNTARY LIQUIDATION) AND WILBURY
LIMITED (IN VOLUNTARY LIQUIDATION)
PLAINTIFFS
AND
CRH
PLC AND IRISH CEMENT LIMITED AND
ROADSTONE
PROVINCES LIMITED AND ROADSTONE DUBLIN LIMITED AND TREDBURN LIMITED AND
READYMIX PLC
AND
KILSARAN CONCRETE PRODUCTS LIMITED AND CPI LIMITED
DEFENDANTS
JUDGMENT
of Mr Justice O’Neill delivered the 21st day of December, 1999.
1. In
the former of the above mentioned proceedings the Petitioner prays the
following relief
(a) That
the name of the company be restored to the Register pursuant to the provisions
of Section 12(6) of the Companies (Amendment) Act, 1992.
(b) Such
directions of provisions as may seem just for placing the company and all
persons in the same position as nearly as may be as if the name of the company
had not been struck off.
(c) Or
that such other Order may be made in the premises as this Honourable Court may
seem fit.
2. In
the latter of the above mentioned proceedings the seventh named Defendant
Kilsaran Concrete Products Limited (hereinafter referred to as Kilsaran) by a
Notice of Motion dated the 27th day of July, 1999 seek the following reliefs:
1. An
Order pursuant to Order 15 Rule 13 of the Rules of the Superior Courts striking
out the name of the second named Plaintiff from the proceedings herein.
2. An
Order pursuant to Order 19 Rule 27 of the Rules of the Superior Courts striking
out those portions of the Plenary Summons and Statement of Claim delivered
herein as relate to the purported claims of the second named Plaintiff on the
ground that same are unnecessary or scandalous or intended to prejudice,
embarrass or delay the fair trial of the action.
3. Further
and in the alternative an Order pursuant to Order 19 Rule 28 of the Rules of
the Superior Courts striking out those portions of the Plenary Summons and
Statements of Claim delivered herein as relate to the purported claims of the
second named Plaintiff on the ground that the same disclose no reasonable cause
of action and/or are frivolous or vexatious.
4. Further
and in the alternative, an Order pursuant to the inherent jurisdiction of this
Honourable Court striking out those portions of the Plenary Summons and
Statements of Claim as relate to the purported claims of the second named
Plaintiff on the ground that same disclosed no reasonable cause of action
and/or are frivolous or vexatious.
5. Further
and other relief.
6. Costs.
3. The
above named company Amantiss Enterprises Limited which is the second named
Plaintiff in the aforesaid plenary proceedings (hereinafter referred to as
Amantiss) was incorporated in the State on the 1st day of December, 1986 under
the Companies Act, 1963. The company carried on the business of the
importation and sale of cement from December, 1986 until March of 1991. The
company ceased trading in March, 1991. On the 1st April, 1994 the company was
placed into voluntary liquidation by resolutions of that date passed by its
members and creditors.
4. By
a plenary summons issued on the 4th day of December, 1996 in the above entitled
plenary proceedings, Amantiss as the second named Plaintiff and Framus Limited
and Wilbury Limited claimed a variety of reliefs against the seven Defendants
named in the said plenary summons. A Statement of Claim was delivered in these
proceedings on the 3rd February, 1998 and reserved on the 15th June, 1998. In
these proceedings it is alleged that the seven Defendants individually and in
conspiracy with each other engaged in anti-competitive practices contrary to
Articles 85 and 86 of the Treaty establishing the European Economic Community
and contrary to Section 5 of the Competition Act, 1991, which said
anti-competitive practices were directed against the three Plaintiffs and as a
consequence of same the three Plaintiffs were driven out of business.
5. A
notice for particulars of the first five Defendants dated the 28th May, 1998
was replied to by reply dated the 18th December, 1998. A further notice for
particulars dated the 4th March, 1999 was served by the first five Defendants
and this was replied to by a reply dated the 22nd day of October, 1999. The
sixth named Defendant delivered a defence on the 20th November, 1998 and a
notice for particulars dated the 10th August, 1999.
6. The
seventh named Defendants Kilsaran issued the notice of motion already referred
to herein on the 27th day of July, 1999. This motion was grounded on the
affidavit of Edmund Fry, Solicitor, Fitzwilliam House, Wilton Place, Dublin 2,
who acts for Kilsaran as seventh named Defendant in the above plenary
proceedings and as a notice party to the aforementioned petition.
7. At
paragraph 6 of the said affidavit Edmund Fry says the following:
“6. For
the purpose of the present application, however I say and believe that
Kilsaran’s real concern is regarding the legal status of Amantiss both
prior to and subsequent to the commencement of these proceedings. In this
regard my firm recently caused a Companies Office search to be carried out
against all three Plaintiffs, the results of which were received on or about
the 26th day of April, 1999. In this regard I beg to refer to a true copy of
the Companies Office search against Amantiss upon which marked with the letters
“EF1” I have signed my name prior to the swearing hereof.”
8. The
aforesaid Companies Office search revealed that Amantiss had been dissolved
with effect from the 19th day of May, 1993 for failure to have made the normal
statutory returns to the Companies Office.
9. Notwithstanding
the foregoing, on the 1st April, 1994 Amantiss had been placed in voluntary
liquidation by resolutions of the same date passed by its members and
creditors.
10. It
is the Petitioner’s case that the striking off of the company on the 19th
May, 1994 had occurred entirely unbeknownst to the company or of the Petitioner
and this state of affairs did not become known to the Petitioner until the 23rd
August, 1999 when the notice of motion hereinbefore mentioned was served.
11. The
Petitioner herein prays the relief in the petition on the grounds that it is
just that the name of the company should be restored to the Register in
circumstances where it has a valuable asset in the form of the aforementioned
plenary proceedings and that it is in the interest of both the members and
creditors of the company that it should be restored to the Register with a view
to ensuring that it can recover damages from the Defendants for the
anti-competitive behaviour alleged in the said proceedings.
12. In
support of the aforesaid petition the Petitioner in a affidavit sworn on the
25th day of September makes the following averments by way of explanation of
the circumstances in which Amantiss came to be struck off and how the company
and the Petitioner failed to become aware of that fact. Commencing at
paragraph 5 of his affidavit he says the following:
“5. Prior
to the service of the said Notice of Motion and grounding affidavit I was
unaware that the company had been struck off the register. In fact, a number
of steps had been taken since the date the company was struck off the register
as follows;
(a) On
the 1st and 5th April, 1994 meetings of the company’s members and
creditors took place at which Des Donegan was appointed liquidator of the
company. In this regard I beg to refer to the resolutions passed at the
meeting of members and creditors of the company appointing Mr Donegan as
liquidator upon which pinned together a marked “SM2” signed my name
prior to the swearing hereof.
(b) On
4th December, 1996 the proceedings described in paragraph 4 above were
instituted in the name of (inter alios) the company. I would like to refer to
the said proceedings when produced. As appears therefrom the company and the
other Plaintiff claim that they have suffered very significant loss and damage
as a consequence of anti-competitive behaviour on the part of the Defendants.
The company claims that it was put out of business as a consequence of such
behaviour.
6. Each
of the above steps was taken without knowledge that the company had been struck
off the register. In this regard I beg to refer to the affidavit sworn by my
brother Francis Maye confirming this to be so, when produced.
7. I
have no doubt at all but that prior to the striking of the companies name off
the register, the Registrar of Companies complied with the provisions of
Section 12 of the 1982 Act and wrote a letter to the company enquiring whether
it was carrying on business and stating that if an answer was not received
within one month from the date of the letter a notice would be published in
Irish Oifigiuil with a view to striking the name of the company off the
register. I am also quite sure that the Registrar duly published an
advertisement in Iris Oifigiuil and sent the company by registered post a
notice that at the expiration of one month from the date of that notice the
company would, unless cause was shown to the contrary, that all outstanding
annual returns were made, be struck off the register and the company would be
dissolved.
8. However,
I did not see the advertisement in Iris Oifigiuil. I do not subscribe to Irish
Oifigiuil. I did not see any letter addressed to the company’s
registered office. I should explain that the company’s registered office
was at my family home in County Sligo. During 1993, both I and my brother,
Francis Maye, were based in Dublin at the time. I fully appreciate that we
should have made arrangements to have post addressed to the registered office
of the company transmitted to us at out address in Dublin. However, I should
explain, that both I and my brother Francis Maye were under enormous stress and
pressure during 1993. We were both working 90-100 hours per week at this time
in an attempt to keep the business of the company going. The company was
engaged in the business of the importation and sale of cement. The business
was under sustained attack by the activities of the Defendants named in the
High Court proceedings described in paragraph 4 above. The particulars to the
statement of claim delivered in the said proceedings shows the type of measures
that were being taken against the company.
9. Both
Francis Maye and me this deponent suffered very significant personal losses at
this time. Because of the losses sustained by the company personal guarantees
which we had given to the company’s creditors were called in. During
July, 1993 National Irish Bank plc obtained an Order for possession against my
family home. There were also proceedings in train at the suit of other banks
including Ulster Bank, Lombard and Ulster Bank, Anglo Irish Bank, Allied Irish
Banks plc, Bank of Ireland and Irish Permanent. We suffered immense hardship
at this time.
10. 1993
was only one of several years of great difficulty for both the company and its
officers and members (including me this deponent). Both the directors of the
company (including me this deponent) and our respective families were under
enormous personal strain. It was a time of great hardship. It was in these
circumstances that we did not get an opportunity to attend to the obligations
which we had to make annual returns to the Registrar of Companies. Messrs
Watters and Company had been the company’s auditors and had been
responsible for auditing the company’s accounts and filing the annual
returns in the Companies Office. However, in the circumstances described above
Messrs Watters and Company were unable to obtain the necessary information to
file the annual returns for any year after 1989.
11. I
fully accept that the company has failed to perform a statutory obligation to
deliver annual returns to the Registrar of Companies. I confirm that steps are
now under way to have the annual returns prepared for the period between 1st
July, 1989 and 1st April, 1994 (when the company went into voluntary
liquidation).
12. I
am very embarrassed that both the voluntary liquidation commenced and the said
proceedings were instituted at a time when the company was struck off the
register. I must stress that these steps took place in ignorance of the fact
that the company had been struck off.
13. At
the time the company was struck off the register (namely on the 19th May,
1993), I say and believe that the company had ceased to carry on business.”
13. As
mentioned hereinbefore all of the Defendants in the plenary proceedings were
put on notice of the petition herein and in due course an affidavit of one
James Nolan a company director, which was sworn on 13th October, 1999 was filed
on behalf of the first five Defendants in the plenary proceedings.
14. In
that affidavit from paragraph 4 onwards Mr Nolan says the following:-
“4. As
appears from the plenary summons in the proceedings to which I have referred,
same were instituted on the 4th December, 1996. As appears from the affidavit
of Seamus Maye, Amantiss Enterprises Limited (hereinafter referred to as
“Amantiss”) had in fact been struck off the register of companies
on the 19th May, 1993 and accordingly did not exist at the time that the
proceedings were instituted. I am advised by the CRH company’s legal
advisers and I believe, that accordingly it was entirely inappropriate that
Amantiss was named as a Plaintiff in the proceedings and I further advised, and
I believe, that the costs incurred by the Defendants in defending the claim
made by Amantiss are properly payable by the Solicitors who purported to
institute proceedings on behalf of Amantiss at a time when that company did not
exist.
5. It
seems astonishing that, notwithstanding that Amantiss was struck off the
register of companies in 1993, a voluntary liquidator was subsequently
purportedly appointed to the company. It is even more astonishing that the
liquidator so appointed should hold that office for some five and a half years
without discovering that the company which he had been appointed to wind up had
in fact been struck off the register of companies and had been dissolved
accordingly.
6. In
paragraph 8 of his affidavit Mr Seamus Maye states that he did not see the
notice which would have been published in Irish Oifigiuil indicating the
intention of the Registrar of Companies to strike Amantiss off the register of
companies. He further says that he did not receive any letter sent by the
Registrar in this regard. This latter averment is difficult to understand,
given that, as Mr Maye makes clear, the registered office of Amantiss was his
own family home. Presumably whatever Mr Maye’s work commitments were,
correspondence addressed to the company at that address would have been seen by
him.
7. Mr
Maye seeks to explain his failure to receive or read this correspondence in
paragraph 8 of his affidavit. He states that both he and his brother
“were under enormous stress and pressure during 1993. We were both
working 90-100 hours per week at this time in an attempt to keep the business
of the company going”. Mr Maye then goes on to allege that the business
of the company (that is to say Amantiss) was under “sustained
attack” by the activities of the Defendants at this time. However, as is
clear from the statement of claim served in the proceedings to which Mr Maye
refers, Amantiss ceased trading in March, 1991 and in this regard I beg to
refer to paragraph 2 of the Statement of Claim. This matter was confirmed by
the Plaintiff’s Replies to Particulars raised on behalf of the CRH
companies. These replies were included in the book of pleadings to which I
have referred and the relevant reply is 5(iii) at page 3 thereof.
8. It
is clear (accordingly) that the explanation preferred by the Petitioner for his
failure to become aware of the intention of the Registrar of Companies to
strike Amantiss from the register of companies is incorrect. It is also clear
that the Petitioner’s averment at paragraph 10 of his affidavit, to the
effects that 1993 was only one of several years of great difficulty for
Amantiss and its officers and members, is also incorrect.
9. It
is also relevant to point out that the first Plaintiff in the proceedings,
Framus Limited ceased to trade in February, 1994 (other than in respect of the
disposal of some fixed assets) and a third named Plaintiff Wilbury Limited (in
voluntary liquidation) ceased to trade in March, 1991. Therefore it cannot be
suggested that the demands placed on the Petitioner by the management of these
companies provides an explanation or excuse for the ongoing failure to file
annual returns in respect of Amantiss in accordance with the requirements of
the Companies Act.”
15. A
further affidavit was sworn by Seamus Maye the Petitioner on the 15th November,
1999 in reply to the Affidavit by Mr Nolan. At paragraph 2 of that affidavit
and thereafter Mr Maye says the following
“...
the voluntary liquidation had commenced and the plenary proceedings were
instituted at a time when both I and my brother Francis Maye (who was the only
other member of the company) were unaware of the fact that the company had been
struck off the register of companies. Had I known that the company had been
struck off the register I would immediately have brought that fact to the
attention of the liquidator. I would also have brought it to the attention of
the Solicitors on record for the Plaintiff in the plenary proceedings. I can
assure this Honourable Court that if I had been aware of this fact I would
immediately have taken legal advice as to the appropriate steps to be taken to
remedy the situation.
3. In
paragraph 6, Mr Nolan questions why I might not have seen correspondence sent
to the registered office of the company, which was my family home in Sligo. As
referred to in paragraph 8 in my first affidavit I was during 1993 living in
Dublin, although my family home remained in Sligo. I was reliant on my wife
who remained in my family home to forward to me the substantial amounts of
correspondence which we were receiving at the time from banks and financial
institutions seeking to recover debts incurred both by the companies which
instituted the plenary proceedings and by other companies. While I cannot say
with certitude why the relevant correspondence was not forwarded to me, my wife
was at the time quite unwell due to the financial pressures we were under and I
believe this is the most probable reason why the relevant correspondence was
not forwarded to me or my brother. As stated in my first affidavit I fully
accept that my brother Francis Maye and I should have put in place arrangements
to ensure that all correspondence sent to the company’s registered
address was transmitted to us in Dublin. However, we failed to do this due to
the enormous stress and pressure we were under at the time.
4. Mr
Nolan points out in paragraph 7 of his affidavit that I said in paragraph 8 of
my affidavit that “the company” was under sustained attack in 1993
by the Defendants to the plenary proceedings, while in fact, Amantiss
Enterprises Limited ceased trading in May, 1991. I fully acknowledge that
where, in paragraph 8 of my first affidavit I referred to our efforts to keep
“the business of the company” going and the fact that “the
business was under sustained attack.” I apologise for my loose use of
language. My intention was to refer to the business then conducted by myself
and my brother Francis Maye. At one time, that business had been conducted
through the vehicles of three separate companies, namely Framus Limited,
Amantiss Enterprises Limited and Wilbury Limited. However, I acknowledge that
by 1993, the business comprised solely of the activities of Framus Limited. I
should therefore have made this plain in my first affidavit.
5. Similarly,
in paragraph 8, Mr Nolan says that the averment in paragraph 10 of my first
affidavit to the effect that 1993 was “one of several years of great
difficulty for both the company and its officers and members” was
incorrect. I accept that it would have been more accurate to say that 1993 was
one of several years of great difficulty for family business, which in 1993
consisted of the activities of Framus Limited as the other two companies had by
that stage been forced to cease trading. I say that in 1993, the officers and
members of Framus Limited, (namely me, this deponent and my brother Francis
Maye) who were also officers and members of Amantiss Enterprises Limited were
under severe personal strain resulting directly from the anti-competitive
conduct of the Defendants in the plenary proceedings, described in detail in
the Statement of Claim”.
16. Central
to the determination of the issues raised in the petition and in the Kilsaran
Motion is the proper construction of Section 12 subsection (6) of the Companies
(Amendment) Act, 1982. This section reads as follows:-
“12
- (1)
Without
prejudice to the generality of Section 311 of the Principal Act, where a
company does not for two consecutive years make the annual returns required by
Section 125 or 126 of the Principal Act, the Registrar of Companies may send to
the company by post a registered letter enquiring whether the company is
carrying on business and stating that, if an answer is not received within one
month of the date of that letter a notice will be published in Iris Oifigiuil
with a view to striking the name of the company off the register.
(2) If
the Registrar after receiving an answer to the effect that the company is not
carrying on business or does not within one month after sending the letter
receive any answer or any annual returns which are outstanding, he may publish
in Iris Oifigiuil and send to the company by registered post a notice that at
the expiration of one month from the date of that notice, the name of the
company mentioned therein will, unless cause is shown to the contrary or all
outstanding annual returns are made, be struck off the register, and the
company shall be dissolved.
(3) Subject
to subsection 4 and 5 of this section, at the expiration of the time mentioned
in the notice the Registrar, unless cause to the contrary is previously shown
by the company, strike its name off the register, and shall publish notice
thereof in Iris Oifigiuil and on the publication in Iris Oifigiuil of this
notice, the company shall be dissolved.
(4) The
liability, if any, of every director, officer and member of the company shall
continue and may be enforced as if the company had not been dissolved.
(5) Nothing
in subsection 3 or 4 of this section shall effect the power of the Court to
wind up the company the name of which has been struck off the register.
(6) If
a company or any member of creditor thereof feels aggrieved by the company
being struck off the register the Court, on an application made (on notice to
the Registrar) by the company or member or creditor before the expiration of 20
years from the publication in Iris Oifigiuil of the notice aforesaid, may, if
satisfied the company was at the time of the striking off carrying on business
or otherwise that it is just that the company be restored to the register,
order that the name of the company be restored to the register, and upon an
office copy of the order being delivered to the Registrar for registration the
company shall be deemed to have continued in existence as if its name had not
been struck off; and the Court may by the Order give such directions and make
such provisions as seem just for placing the company and all other persons in
the same position as nearly as maybe as if the name of the company had not been
struck off. ...”
17. The
issue which arises in these proceedings for determination, is what is the
correct construction of that part of subsection (6) of Section 12 above which
commences with the words
“and upon an office copy of the order being delivered to the Registrar
for registration the company shall be deemed to have continued in existence as
if its name had not been struck off; and the Court may by order give such
directions and make such provisions as seem just for placing the company and
all other persons in the same position as nearly as may be as if the name of
the company had not been struck off.”
18. For
the Petitioner and the Plaintiffs in the Plenary proceedings Mr Shipsey
submitted that this statutory provision has the effect of validating all acts
done by the company between its dissolution on the 19th May, 1993 and its
restoration to the Registrar and hence the appointment of the liquidator and
the institution of the Plenary proceedings were valid acts of the company. For
the Notice Parties in the petition and Defendants in the Plenary proceedings,
Mr Sreenan on behalf of the first five such Defendants, Mr Murray for the sixth
named Defendant, Mr McCann for the seventh named Defendant and Mr Gleeson for
the eighth named Defendant submitted that the words
“the
company shall be deemed to have continued in existence as if its name had not
been struck off”
have the effect merely of restoring the status of incorporation of the company
and its identity but do not have the effect of validating retrospectively any
acts done between dissolution and restoration to the register. All of these
parties further submitted that the remainder of the subsection namely
“and
the Court may by the Order give such directions and make such provisions as
seem just for placing the company and all other persons in the same position as
nearly as may be as if the name of the company had not been struck off”
has the effect of giving to the Court the power by specific order to validate
retrospectively acts that may have been done during dissolution. It was
submitted by these parties that were the “deeming” part of the
subsection to be construed as conferring automatic validation on the acts of
the company during dissolution that the part of the subsection after the
semicolon giving to the Court power to make orders would be redundant and otiose.
19. The
objections of all the Notice Parties to the petition were put on the basis that
they had no interest in opposing restoration to the register per se. Their
objections would arise only in the circumstance that the Court would construe
subsection (6) of Section 12 as conferring an automatic and retrospective
validation of all acts done by the company between dissolution and restoration
or in the alternative that if the Court were to construe the subsection as not
conferring automatic retrospective validation, but that this could be achieved
by specific order of the Court, that in that circumstance these parties
objected to the making of such distinct order having the effect of validating
such acts as the appointment of the Liquidator and the institution of the
Plenary proceedings on the grounds that in all of the circumstances of the case
(which I will deal with later), that it would not be just that the company be
restored to the register.
20. Before
beginning to consider these submissions and the cases to which I was referred I
should draw attention to Section 310 of the Companies Act, 1963 which reads as
follows:-
“310(1) Where
a company has been dissolved, the Court may at any time within two years of the
date of the dissolution, on an application being made for the purpose by the
Liquidator of the company or by any other person who appears to the Court to be
interested, make an order, upon such terms as the Court thinks fit declaring
that this dissolution to have been void, and thereupon such proceedings may be
taken as might have been taken if the company had not been dissolved. ...”
21. This
section makes provision for declaring void a dissolution of a company where the
company has been dissolved either as a result of a voluntary liquidation or a
Court liquidation, in contra distinction to Section 12 subsection (6) which
provides for the situation where a dissolution of a company results from the
company being struck off the register under the provisions of Section 12 of the
1982 Act.
22. I
draw attention to Section 310 of the 1963 Act only for the purpose of
contrasting the language used in that section as compared to subsection (6) of
Section 12 of the 1982 Act. I do so also because Section 310 of the 1963 Act
is in exactly similar terms to Section 352 subsection 1 of the English
Companies Act of 1948 subsequently replaced by subsections 1 and 2 of Section
651 of the English Companies Act, 1985. Similarly, Section 12 subsection (6)
of the Companies (Amendment) Act, 1982 is in exactly similar terms to Section
353 subsection (6) of the English Companies Act of 1948 which in turn was
replaced by subsections 1, 2 and 3 of Section 653 of the English Companies Act
of 1985.
23. Mr
Shipsey for the Petitioner and all Counsel for the Notice Parties and
Defendants in the Plenary proceedings relied upon the majority judgments of the
Court of Appeal in
Tymans
Limited -v- Craven
[1952] 1 All E.R. 613 [1952] 2 QB. 100. In that case the Court was concerned
that the construction of subsection (6) of Section 353 of the English Companies
Act of 1948.
24. The
Court of Appeal in this case by a majority held as the headnote reveals;
“Per
Evershed M.R. and Hodson L.J.
(1)
that
an order of the Court made under Section 353(6) of the Companies Act, 1948
restoring to the register the name of a company previously dissolved under
subsection (5) of the same section and declaring that “the company shall
be deemed to have continued in existence as if its name had not been struck
off” is effective to validate retrospectively all acts done in the name
or on behalf of the company during the period between its dissolution and the
restoration of its name to the register; and that the County Court accordingly
had jurisdiction to consider the application for a new lease;
(2) that
the final words of the subsection empowering “to give such directions and
make such provisions as seem just for placing the company and all other persons
in the same position as nearly as maybe as if the name of the company had not
been struck off” are not expository, qualifying the scope of the
proceeding general words, but complimentary only to those general words so as
to enable the Court to achieve to the fullest extent consistent with justice
the “as you were” position of the company.
Per
Jenkins L.J. dissenting; On the construction of the section an order of the
Court
restoring a company to the register
(1)
operates
only to restore and preserve the original corporate status and identity of the
company and
(2)
may
at the discretion of the Court provide for a validation of acts done during
dissolution but
(3)
does
not in the absence of any such provision validate any such acts.
Morris
-v- Harris
[1927] A.C. 252 distinguish.”
25. Mr
Shipsey on behalf of the Petitioner relied on the majority judgments as
persuasive authority for the proposition that Section 12 subsection (6) of the
Companies (Amendment) Act, 1982 which is in exactly similar terms to Section
353(6) of the English Companies Act, 1948, has the effect of automatically
conferring retrospective validation on all acts done by the company in the
period between dissolution and restoration.
26. Counsel
for the Notice Parties and Defendants in the Plenary proceedings relied upon
the dissenting judgment of Jenkins L.J. as authority for their submissions to
the effect set out above. In addition to reliance upon the judgment of Jenkins
L.J. in this case Counsel for these parties cited a decision of the Court of
Appeal of British Columbia in Canada in which judgment was given on the 6th
June, 1990 in which the dissenting judgment of Jenkins L.J. in
Tyman
-v- Craven
was cited with approval and followed where an issue arose as to the
construction of Sections 286 and 287 of the relevant Companies Act of that
jurisdiction. These two sections i.e. 286 and 287 of that Company Act appeared
to me to be an amalgam of sections, containing together and intermixed the
various provisions which are separately provided for in Sections 310 of the
Companies Act of 1963 and Section 12 subsection (6) of the Companies
(Amendment) Act, 1982.
27. In
addition Mr McCann for Kilsaran cited the decision of Judge Paul Baker Q.C.
sitting as a High Court judge in the case of
In
Re: Townreach Limited
and
In
Re: Principal Business Machines Limited
[1995] Ch. 98 as containing at page 41 of the report a passage which cites
with approval the dissenting judgment of Jenkins L.J. in
Tymans
Limited -v- Craven
.
28. Having
carefully considered Counsel’s submissions, the cases cited and the
relevant statutory provisions I find the reasoning of the majority judgments in
the
Tyman
case preferable, and hold that the words
“the
company shall be deemed to have continued in existence as if its name had not
been struck off”
have the effect of validating retrospectively all acts done in the name or on
behalf of the company during the period between its dissolution and the
restoration of its name to the register, and that the words
“and
the Court may by order give such directions and make such provisions as seem
just for placing the company and all other persons in the same position as
nearly as may be as if the name of the company had not been struck off”
are not expository qualifying the scope of the proceeding general word but are
complementary only to those general words so as to enable the Court to achieve
to the fullest extent consistent with justice the
“as
you were”
position of the company.
29. I
have come to this conclusion for the following reasons.
Section
12 subsection (6) is there for the purpose of restoring a company to the
register where the dissolution of the company is brought about by the removal
from the register under
subsection 3 of
Section 12. Thus
Section 12 subsection
(6) applies when there has been no winding up of the company, save with one
exception, namely that dealt with in subsection (5) of
Section 12, where it is
provided that the power of the Court to wind up a company is unaffected by it
being struck off the register. Generally, however, it may fairly be said that
apart from the foregoing exception,
subsection 12(6) provides relief in
circumstances where a company is struck off the register where no winding up
has taken place. This may frequently happen without anyone interested in the
company being aware of it. As was remarked by Evershed M.R. in his judgment in
Tymans
Limited -v- Craven
at page 107 of the report where he says the following in reference to Section
353(6) of the English Companies Act of 1948:-
“The
section is therefore specifically directed (and the subsection in its original
form in the Act of 1880 was exclusively applicable) to cases, like the present
where a company which has failed in the performance of its statutory duties,
has nevertheless continued to trade and to transact business, and, necessarily
as a consequence entered into numerous engagements with third parties.”
30. Further
on at page 112 of the report the learned judge adds the following:-
“But,
as I have already stated, the subsection is in terms directed to the case (like
the present) when during the period, possibly of long duration of the
company’s dissolution many acts will have been done and many engagements
entered into by individuals purporting to act as directors or officers of the
company and in its name. In this regard the subsection operates in reference
to circumstance wholly different from the circumstances relevant to an order
under Section 352, such as make it at least reasonable and sensible to expect
that the reanimation of the company should be retroactive in its effect.”
31. In
my view the plain and very reasonable and sensible intendment of subsection (6)
of Section 12 is to preserve the validity of transactions entered into during a
period of dissolution where frequently that dissolution is unknown to either
the company and its officers or third parties dealing with it, and who conduct
their business with each other and enter into engagements with each other on
the basis that the company enjoys lawful existence. To remove legal validity
from all of these transactions in circumstances where the parties to them at
the time of their making intended them to have legal validity would in a great
many instances work injustices and would provide the unscrupulous with much
opportunity for mischief. I have no doubt that the legislature, in selecting
the very clear language used in subsection (6) of Section 12, intended that
such unfortunate consequences would not occur by reason of an unintended
dissolution where no orderly process of winding up had taken place.
32. I
tend to be reinforced in that conclusion by a consideration of the alternative
proposition namely that for validity to accrue to transactions which took place
during dissolution a specific order or direction would be required under the
latter part of subsection (6). In most cases of companies who were struck off
the register under Section 12(3) that would necessitate a host of parties
having to be heard on an application such as the present one to restore the
name of a company to the register or alternatively would lead to much separate
litigation in order to determine the validity of all such transactions.
33. This
problem was alluded to by Evershed M.R. at page 111 of the report where he says:-
“If
on the power contained in the final words of the subsection in question to
insert special directions in the order of resuscitation depended on the
validation of all the multifarious engagements into which the dissolved company
might have entered during the period of its statutory suspense (a period which
might have lasted for twenty years), what will be the appropriate procedure?
Prima facie, all of the third parties concerned would have to be given an
opportunity to make representations to the Court, a proceeding which I find it
well nigh impossible to contemplate.”
34. Evershed
M.R. then went on to consider what meaning must be given to the final words of
the subsection. He resolves that problem with these words;
“In
my judgment the final words of this subsection can properly and usefully
regarded as intended to give to the Court, where justice requires and the
general words would or might not themselves suffice, the power to put both
company and third parties in the same position as they would have occupied in
such cases if the dissolution of the company had not intervened. More
generally the final words of this section seem to me designed, not by way of
exposition, to qualify the generality of that which precedes them, but rather
as a complement to the general words so as to enable the Court (consistently
with justice) to achieve to the fullest extent the “as you were
position” which, according to the ordinary sense of those general words
is prima facie, and their consequence”.
35. With
this analysis of the final part of subsection (6) I respectfully agree.
36. Its
conclusion is reinforced by a consideration of the meaning and effect of the
words “and the Court may by order” which leads into the final part
of subsection (6). It is clear in my view that in adopting this phrase the
legislature did not intend that the retroactive effect of the preceding part of
subsection (6) would be limited by the power to give direction. The use of the
word “may” making it clear that the exercise of such power is
essentially surplus to the existence of retroactive validation. Here I cite
with approval the following passage from the judgment of Hodson L.J. in the
Tyman case where he says as follows:-
“For
my part I think the words of Section 353(6) are clearly designed to produce an
“as you were” position and think that the latter part of the
subsection is complementary and intended to provide for cases where provision
is necessary in order to clarify an obscure position or give back to the
company an opportunity which it might otherwise have lost. An example of this
would be a case where a company had lost an opportunity of obtaining a
concession or renewing a lease during the interval between its dissolution and
an order under the subsection. A provision in the order could deal with such a
case. That the last four lines of the section do not cut down the retroactive
effect of that which precedes them is, to my mind, indicated by the
introductory words “and the Court may by the order”. The
directions and provisions to be made by the Order would naturally be supposed
to make good what had previously been stated, namely that the company should be
deemed to have continued in existence as if the name had not been struck
off.”
37. In
reaching an understanding of subsection (6) of Section 12 some assistance is to
be obtained by looking at the different language used in Section 310 of the
Companies Act, 1963 which deals with the situation where a dissolution occurs
following a winding up in a voluntary liquidation, or a Court liquidation.
Necessarily in these circumstances there will be no question of the company
having, since dissolution, conducted trading or business operations. If acts
were done in the name of the company following dissolution in these
circumstances it is hard to imagine how they could have a lawful character and
hence, as a matter of principle, retroactive validation could not ensue
automatically on a declaration under Section 310, that the dissolution was
void. The use of the phrase in Section 310:-
“And
thereupon such proceedings may be taken as might have been taken if the company
had not been dissolved”
would seem intended to have the effect of enabling from that point, namely when
the declaration is made, the company to sue or be sued.
38. Section
223 of the English Companies Act, 1908 which was replaced by Section 352
subsection (1) of the English Companies Act of 1948 and in turn was replaced by
Section 651 of the English Companies of 1985 was so construed by a majority
decision of the House of Lords in the case of
Morris
-v- Harris
[1927] A.C. 252.
39. As
mentioned earlier in this judgment, Counsel for all of the Notice Parties in
the petition and Defendants in the proceedings relied upon the decision of the
Court of Appeal in British Columbia, Canada in the case of
Natural
Nectar Products Canada Limited
(Plaintiff)
(Respondent) and Michael Theodor (Defendant) (Appellant)
which judgment was given on June 6th , 1990. Here the Court was concerned with
the interpretation of Sections 286 and 287 of the Companies Act of the relevant
jurisdiction. In my opinion these two sections of that Companies Act seem to
me to amalgamate and combine what is contained separately in Section 12(6) of
the Companies (Amendment) Act, 1982 and Section 310 of the Companies Act, 1963.
That being so, I do not find this decision in its reliance upon the judgment of
Jenkins L.J. in the
Tymans
case of assistance in construing the meaning and effect of Section 12(6).
40. Mr
McCann on behalf of Kilsaran cited a passage from the judgment of Judge Paul
Baker Q.C. sitting as a judge of the High Court of
In
Re Townreach Limited
at page 41 of the report. In this case there is the unusual circumstance of an
application being made by the Secretary of State for an order under Section 651
of the English Companies Act, 1985 in circumstances where a company had been
struck off the register under Section 653. The learned judge took the view
that the term “dissolution” used in Section 651 was broad enough to
encompass a dissolution resulting from a strike off the register under Section
653. Having permitted the application to be brought under Section 651 the
learned judge then proceeded to consider amongst other cases that of
Tymans
Limited -v- Craven
and in particular the dissenting judgment of Jenkins L.J. I prefer the
reasoning of the majority judgments in that case and hence I can find nothing
that is persuasive in the judgment in this case.
41. In
summary therefore, I have come to the conclusion that an order restoring a
company to the register under Section 12(6) of the Companies (Amendment) Act,
1982 has the automatic effect of rendering valid in law all acts done by or on
behalf of the company or in its name during the period from its dissolution
until restoration to the register. Having reached that conclusion it is not
necessary for me to make any ancillary or specific orders in order to validate
either the institution of the Plenary proceedings or the appointment of the
Liquidator.
42. Having
reached this conclusion I must now consider the submissions made by all the
Notice Parties to the petition to the effect that it would not be just that the
company be restored to the register.
43. These
submissions stressed the following factors:-
1. That
there was no automatic right to restoration.
2. That
the Petitioner must show good reasons why he should be restored and must excuse
those reasons which resulted in the striking off.
3. That
the company had displayed a nonchalant attitude to the statutory requirements
as contained in the
Companies Act and in regard to the conduct of the High
Court Plenary litigation.
4. That
no annual returns had been filed in the Companies Office from 1989 onwards.
5. That
when the Liquidator was appointed the company had already been struck off for
some significant time.
6. That
the Liquidator had failed to deliver notice of his appointment to the Registrar
as required by
Section 278 of the
Companies Act, 1963 and failed to make any
returns of any description thereafter.
7. That
there was no explanation offered good, bad or indifferent on affidavit or
otherwise in these proceedings by the Liquidator of his failures to have
complied with his obligations under the
Companies Act.
8. That
there was no explanation of any description on affidavit, or otherwise of how
the extraordinary situation occurred in the first instance and continued, that
the Liquidator failed to become unaware of and remained unaware of the fact
that the company had been struck off on the 19th May, 1993.
9. That
there had been no adequate or convincing explanation by the Petitioner of how
he was unaware and remained unaware of the fact that the company had been
struck off the register.
10. That
there was no explanation proffered from the Solicitor who acted for the
Plaintiffs in the Plenary proceedings as to how he was unaware of the fact that
the company had been struck off.
11. That
the approach adopted by the Petitioner and his brother in these proceedings was
somewhat casual and some of the content of the first affidavit sworn by the
Petitioner had to be corrected in a second affidavit on the basis that some of
the language used in the first affidavit was “loose use of language”.
12. That
the returns which have now been made available for filing in the Companies
Office are wholly inadequate, in that the Accountant’s report attached to
the same is so heavily qualified that the exercise conducted here is no more
than a superficial attempt to provide minimal compliance with statutory
requirement.
13. That
the Defendants in the Plenary proceedings ought not to have been sued by an
entity not then in existence and were thereby prejudiced.
14. That
in restoring a company to the register with retrospective validation for all
acts done in the period of dissolution, that the Defendants are now being
deprived of the benefit of what would be a defence under the Statute of
Limitations if the company was compelled to initiate proceedings afresh against
the Defendants following restoration.
44. I
am satisfied from the affidavits that were filed on behalf of the Petitioner
that the striking off of the company occurred unbeknownst to the Petitioner and
that this fact did not become known to them until August of 1999. I am also
satisfied, and indeed in this regard there are numerous admissions in the
affidavits filed on behalf of the Petitioner and to which attention is drawn in
the affidavit of James Nolan, that there was a great deal of casualness,
carelessness and indeed downright dereliction of duty resulting in failure to
comply with the provisions of the Companies Act, 1963 all of which resulted in
the striking off of the company on the 19th May, 1993. I am satisfied that the
fact that this situation continued unbeknownst to the Petitioner and apparently
the Liquidator was equally the result of a high degree of carelessness and
further dereliction of duty.
45. However,
such default as there was, and in this regard I accept Mr Shipsey’s
submission was default as against the Registrar of Companies and not
specifically against the Notice Parties. I am not satisfied that the Notice
Parties had been able to point to any specific prejudice that they have
suffered as a result of the striking off. I do not accept that the institution
of proceedings against them at the time was a specific prejudice having regard
to my conclusions as to the meaning and effect of Section 12 subsection (6). I
am mindful of the fact that to refuse the reliefs sought in the petition would
have the effect of determining the Plenary proceedings insofar as Amantiss is
concerned and I do not believe that I should exercise my discretion in that way
at the behest of those parties who would gain the advantage from such
determination.
46. Finally,
I am impressed by the fact that Counsel for the Registrar has no objection to
the relief being sought in the petition being granted, having regard to the
uniqueness of the Registrar’s position in assessing compliance with the
relevant statutory requirement.
47. For
these reasons, I am disposed to grant the relief claimed in the petition.
48. It
necessarily follows from the conclusions I have reached in relation to Section
12(6), that I must refuse the relief claimed in the Kilsaran Notice of Motion.
tcjonfl
© 1999 Irish High Court
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