Supreme Court strikes out appeals by liquidated companies lacking liquidator consent and stays proceedings.

THE SUPREME COURT

Appeal No: 445/2012

Denham C.J.

Clarke J.

MacMenamin J.

Between/

Framus Limited, Amantiss Enterprises Limited

(In Liquidation) and

Wilbury Limited (In Liquidation)

Plaintiffs/Appellants

and

CRH plc, Irish Cement Limited, Roadstone Provinces

Limited, Roadstone Dublin Limited, Tradburn Limited,

Readymix plc, Kilsaran Concrete Products Limited,

and CPI Limited

Defendants/Respondents

Judgment delivered on the 14th day of May 2013 by Denham C.J.

1. Before the Court were motions brought, or supported, by the eight defendants/respondents, referred to as “the respondents”, in

this case.

2. Mr. Paul Sreenan S.C. moved the motion on behalf of the first five respondents. Mr. Brian Murray S.C. moved the motion on behalf

of the sixth named defendant. Mr. C. McNamara B.L. moved the motion on behalf of the eighth respondent. The seventh respondent

did not bring a separate motion; however, Ms. B. Quigley B.L. appearing on its behalf, informed the Court that the seventh named

respondent supported the motions.

3. Essentially, counsel for the respondents all adopted each others submissions.

4. Mr. J. Hennessy S.C. appeared for Framus Limited, referred to as “the first appellant”, and Mr. Seamus Maye, director and

shareholder of the appellant companies. The Court was informed that Philip Lee, Solicitors, were on record as solicitors for Amantiss

Enterprises Ltd (In Liquidation), referred to as “the second appellant”, and Wilbury Limited (In Liquidation), referred to as “the third

appellant”, and that they were served with, and on notice of, the motions. Further, that the liquidator knew of the motions.

5. There was no representation by or on behalf of the liquidator.

Motions by first to fifth named respondents

6. The motions brought by the first to fifth named respondents sought:-

(i) An order pursuant to the inherent jurisdiction of the Court striking out the appeals of the second and third named

appellants on the basis that the appeals were brought without the consent or authority of the liquidator of these

appellants.

(ii) An order pursuant to Order 58, Rule 8 and/or the inherent jurisdiction of the Court against Seamus Maye in

respect of the costs of this motion and the costs incurred by the first to fifth named respondents in connection

with the appeal brought by the second and third named appellants.

(iii) If necessary, an order joining Seamus Maye as a party to these proceedings for the purposes of making an order

for costs against him.

7. The motion was grounded on an affidavit of the 30th November, 2012, of James Andrew Lenny, Arthur Cox Solicitors, solicitor for

the first to fifth named respondents.

8. He deposed to background facts, including the following:-

(i) On the 19th July, 2012, the High Court (Cooke J.) ordered that the proceedings stand dismissed for delay.

(ii) On the 26th September, 2012, a Notice of Appeal to this Court, was served by the three appellants, referred to

collectively as “the appellants”, which was filed in the Supreme Court Office on the 2nd October, 2012.

(iii) On the 4th October, 2012, the solicitors for the first to fifth named respondents wrote to the liquidator seeking

confirmation that he had authorised the appeal, and querying whether he continued to authorise the prosecution of

the appeal.

(iv) It appears that it was only on the 4th October, 2012, that a copy of the Notice of Appeal was sent by email to

the liquidator by Mr Maye.

(v) By letter dated the 17th October, 2012, the liquidator responded to Mr. Maye’s email of the 4th October, 2012,

querying why the current appeal action had taken place without seeking his approval and consent, and stating that

he was not in favour of the appeal proceeding.

(vi) Following a reply by Mr. Maye of the 18th October, 2012, the liquidator by email on the 18th October, 2012,

stated that he had not given consent to the appeal being brought.

(vii) The first to fifth named respondents were not informed of this situation. They understood that the appeal was

proceeding.

(viii) The solicitors for the first to fifth named respondents issued a security for costs motion on the 26th October,

2012, against the appellants.

(ix) On the 16th November, 2012, the solicitor for the appellants wrote to the solicitors for the first to fifth named

respondents confirming that they intended to issue a motion to adduce additional evidence.

(x) The appellants issued that motion on the 20th November, 2012.

(xi) The first to fifth named respondents were unaware that the liquidator had not authorised the appeal until

Adams Solicitors, acting for the liquidator, wrote to the respondents’ solicitors on the 21st November, 2012.

This letter stated clearly that the liquidator did not authorise the service of the Notice of Appeal or the prosecution

of the appeal in the Supreme Court on behalf of the second and third named appellants.

It was stated in the said letter that the liquidator had taken a decision to offer to assign the cause of action to the

shareholders of the companies and awaited a response to the offer.

(x) Mr. Maye has deposed an affidavit on behalf of the appellants.

(xi) The solicitors for the respondents sought an explanation from the solicitors of the appellants as to why they

had not been informed earlier of the liquidator’s view on the appeal.

9. From correspondence before the Court, from the solicitors for the liquidator to the solicitors for the first to fifth named

respondents, which was exhibited in the affidavit of Mr. Lenny, it appears that the liquidator’s point of view is:-

(i) The liquidator did not lead Mr. Maye to believe that he had no objection to an appeal being prosecuted by the

second and third named appellants.

(ii) The liquidator never authorised an appeal by the second and third named appellants.

(iii) The liquidator was not aware that the judgment had issued, and he was not aware that the appeal had been

filed.

(iv) In advance of Mr. Maye writing to him on the 4th October, 2012, attaching the Notice of Appeal, the liquidator

was not aware of the outcome of the High Court case or that Mr. Maye had lodged an appeal.

(v) The liquidator set out his position clearly to Mr. Maye in his letter of the 17th October, 2012.

10. The first to fifth named respondents seek to have the appeal brought on behalf of the second and third named appellants struck

out, as the liquidator had not authorised or consented to such appeals.

11. It appears that the liquidator of the second and third named appellants has offered to assign the cause of action to the

shareholder of those companies for the price of €219,618.

12. However, the issue then arises that, even if such an assignment is made, would this cure any illegality in the filing of the notice of

appeal on behalf of the second and third named appellants without the authorisation or consent of the liquidator.

13. It was submitted that the first to fifth named respondents have incurred expenses in defending the appeal and bringing a motion

seeking security for costs in circumstances where the liquidator had not authorised the appeal.

14. The first to fifth named respondents seek costs to be awarded against Mr. Maye, and, if necessary, to join him as a party so that

an order for costs may be made against him.

Motion by Readymix

15. A motion was brought by the sixth named respondent, Readymix plc, referred to as “Readymix”, seeking an order striking out the

notice of appeal of the second and third named appellants, or staying the said appeals, and an order vacating the stay ordered by

this Court on the 5th October, 2012, and continued on the 23rd November, 2012, staying the judgment and order of the High Court

(Cooke J.) of the 19th July, 2012, and the 26th July, 2012, insofar as it concerns the second and third named appellants.

16. The motion was grounded on the affidavit of the 30th November, 2012, of Helen O’Connor, Solicitor, of McCann Fitzgerald

Solicitors, solicitors for Readymix, in which she deposed that the liquidator, Mr. Des Donegan, acting on behalf of the second and third

named appellants, did not authorise the service of the notice of appeal, or the prosecution of the appeal, and did not consider that

the appeal was in the best interests of the creditors of the second and third named appellants; that the liquidator has offered to

assign the cause of action to the shareholders of the second and third named appellant, and a response was awaited.

17. Readymix has incurred costs in successfully defending the pleadings in the High Court, and in the course of steps taken to meet

the appeal of the appellants, and did not wish to incur any further unwarranted costs in defending the appeal of the second and third

named appellants.

Motion by CPI

18. A motion was brought on behalf of the eighth named defendant/respondent, CPI Limited, referred to as “CPI”, for:-

(i) An order striking out the appeal of the second and third named appellants as being an abuse of process;

(ii) Further and other orders,

and

(iii) Costs.

19. The motion was grounded on the affidavit of the 30th November, 2012, of Eve Mulconry, Solicitor, of Arthur Cox, Solicitors,

solicitors for CPI, in which she deposed that the notice of appeal of the second and third named appellants should be struck out as an

abuse of process, in circumstances where the liquidator of the second and third named appellants did not sanction the appeal, which

was lodged on behalf of both companies which are in voluntary liquidation, and does not support its continued prosecution as being in

the best interests of the creditors of the appellants.

20. On the 27th September, 2012, CPI had been served with a notice of appeal, and a motion returnable to the 5th October, 2012,

that sought to extend the stay on the High Court order until the determination of the appeal.

21. CPI indicated that they would oppose the application for a stay and would apply for security for costs.

22. The appellants indicated that they wished to issue a motion of additional evidence before the Supreme Court, to support their

first ground of appeal that the judgment of Cooke J. was tainted by objective bias.

23. On the 21st October, 2012, CPI issued a motion to compel the appellants to provide security for costs.

24. On the 22nd November, 2012, CPI received information that the liquidator, Mr. Des Donegan, had not authorised the appeal that

was being prosecuted on behalf of the second and third named appellants, of which he is the liquidator, and that he did not support

the prosecution of the appeal. However, he had offered to assign the claims of the second and third named appellants to its

shareholder.

25. It was deposed that it appeared that Mr. Des Donegan never gave instructions to Mr. Maye, or Philip Lee, the solicitors on record

for the appellants, to prosecute an appeal in the name of the second and third named appellants.

26. It was submitted that proceedings cannot be instituted, or maintained, in a court by a company in voluntary liquidation without

the authority of the liquidator.

27. It was submitted that the continued maintenance of the appeals by the second and third named appellants represents an abuse

of process and that they should be struck out.

Liquidator

28. A liquidator has been appointed to Amantiss Enterprises Limited and to Wilbury Limited. It was not disputed that where a liquidator

has been appointed to a company, the liquidator would have to give consent to a step such as filing an appeal to the Supreme Court

and proceeding with such an appeal. The issue arose as to whether he had given such consent.

Conflict

29. There is a degree of conflict of fact before the Court as to the consent or decision of the liquidator. On behalf of the

respondents, it is strongly argued that he never consented to an appeal and that thus, the appeal is a nullity and the appeals should

be struck out.

30. One of the letters opened before the Court was from the solicitors for the liquidator. By letter dated the 21st November, 2012,

Adams, Solicitors, for the liquidator, wrote to Arthur Cox stating, inter alia:-

“We refer to the above matter and to your correspondence of the 4th October and 9th November, 2012.

Our instructions are that our client did not authorise the service of the Notice of Appeal or the prosecution of the appeal

to the Supreme Court on behalf of the Second and Third Named Plaintiffs (“the Companies”). Our client does not support

the Appeal as it is not in the best interests of the creditors of the Companies.

We apologise for the delay in reverting to you, however our client has had to give consideration as to what would be in

the best interests of the creditors of the Companies. In this regard, our client has taken a decision to offer to assign the

within cause of action as it subsists to the shareholder of the Companies and awaits a response to this offer.”

31. However, counsel on behalf of the first named appellant and Mr. Maye argued that the liquidator had consented to the

commencement and prosecution of the proceedings. For example, in a letter from Philip Lee, Solicitors, dated the 30th November,

2012, to Adams, Solicitors for the liquidator, it was stated, inter alia:-

“In or about November 1996, your client consented to the commencement and prosecution of the within proceedings on

the following basis:

1. All plaintiff costs in the proceedings would be to the account of Framus Limited; responsibility for such costs

would not attach to your client.

2. Framus Limited would have carriage of the proceedings; and

3. Your client reserved the right to discontinue the proceedings at any time he deemed appropriate.

Periodically, your client was informed of the progress of the proceedings by Mr. Seamus Maye, Director of Framus

Limited and of Amantiss Enterprises Limited and Wilbury Limited. Most recently, Mr. Maye met with Mr. Donegan on

26 June 2012. During their meeting, the question of an appeal against the then pending Judgment of Mr. Justice

Cooke was openly discussed. Mr. Maye specifically stated that, if the Judgment went against the Plaintiffs, then,

subject to the content of the judgment, they would have little option but to appeal. No objection was made by your

client. Nor did he voice any objection to the steps taken to prosecute the proceedings up to that point.”

Creditors Meeting

32. An additional factor is that a creditors’ meeting was called, pursuant to the order of Laffoy J. made on the 22nd January, 2013, to

obtain the views of the creditors as to the appeal. The Court was informed that the creditors were in favour of the appeal

proceeding.

A general case

33. In general, if a party came into court seeking that an appeal be struck out, and, the other party having notice of the motion, but

deciding not to be present or represented, such a motion would succeed and the appeal would be struck out.

Circumstances

34. However, a court has to consider all the circumstances of a case.

35. In this case the circumstances include a letter from Arthur Cox to Mr. Des Donegan, Donegan and Associates, the liquidator,

dated the 4th October, 2012, which stated:-

“We act for the First to Fifth Named Defendants in the above-mentioned proceedings.

We note that you were appointed liquidator to the Second Named Plaintiff, Amantiss Enterprises Limited (in Liquidation)

and the Third Named Plaintiff, Wilbury Limited (in Liquidation) in these proceedings on 1 April 1994.

We were passed a copy of your solicitor's letter addressed to Philip Lee & Associates solicitors dated 27 November 1996,

wherein it was confirmed on your behalf that "...it is now in order... to issue proceedings... ".

As you may be aware, following motions issued by the defendants to dismiss the proceedings for delay in their

prosecution, Mr Justice Cooke ordered that the proceedings stand dismissed on 19 July 2012. The Plaintiffs then served a

Notice of Appeal to the Supreme Court on the defendants on 25 September 2012 ("the Appeal").

In these circumstances, please confirm by return whether you continue to authorise the progression of these proceedings

and in particular whether you authorised the service of the Notice of Appeal and continue to authorise the prosecution of

the appeal to the Supreme Court on the part of the Second and Third Named Plaintiffs.

We must advise you that it is our clients' intention to apply for security for the costs of defending the Appeal. In the

event that there is any shortfall in any costs in relation to the Appeal, our clients will be seeking an Order from the Court

that will entitle our clients to hold any third party funder of the litigation responsible for any shortfall in costs to our

clients. Our clients will also seek to hold you personally liable for any shortfall in any costs in relation to the Appeal that

are not recovered from the Plaintiff companies insofar as you are liquidator and authorise the prosecution of these

proceedings.

This letter is without prejudice to our clients rights to pursue you personally in respect of costs already awarded in the

High Court against the Second and Third Named Plaintiffs (in liquidation).

We await hearing from you.”

36. The conflict of fact as to whether consent was given is a relevant factor in the circumstances of the case.

37. Also, the creditors’ meeting and views supporting an appeal are relevant.

38. The fact that the liquidator was neither in court or represented in court, but was on notice of the hearing, is also a relevant

circumstance.

Order

39. The proposed order would be as follows:-

(i) I would strike out the appeals of the second and third appellants, with a stay of three months on the order.

(ii) The period of three months is designed to afford a realistic timeframe within which the jurisdiction of the High

Court may be invoked, and any order which the High Court may be persuaded to make, be implemented.

To take into account the possibility that, even if matters are attended to with all necessary expedition, any process might not have

fully completed within that timeframe, I would give liberty to apply to any party in any relevant High Court proceedings, on the

following conditions:-

(a) any application for an extension of time must be made to this Court within the three month period

referred to;

(b) it must be demonstrated by affidavit evidence that all steps within the power of the applicant

connected with seeking to invoke and implement the supervisory jurisdiction of the High Court were

taken in a very timely fashion consistent with the intent of this Court that the entire process be

completed and implemented (if the High Court is persuaded that any measures should be adopted)

within a three month period;

(c) that it remains the case, in the light of the progress of any relevant application, that there is a

realistic possibility that suitable measures (which would allow the appeals to progress lawfully) may be

achieved at the end of the day.

(iii) The moving parties should be put on notice of any such application and would, of course, have an entitlement

to resist any extension of time.

(iv) In the event that measures have been put in place which, it is contended, allow these appeals to be

prosecuted in a lawful manner, liberty to any person claiming to be lawfully able to conduct the appeals on behalf of

or in the name of the second and third appellant, to apply for any order deemed appropriate. Such application,

again, to be brought within the relevant period of three months or any extension thereof given in accordance with

the preceding paragraphs. Such application to be grounded on an affidavit specifying any orders or directions of the

High Court given and any measures adopted either as a result of any such orders or directions or otherwise so as to

demonstrate that the appeal can lawfully progress. Again, such application should be on notice to the moving

parties who will have the opportunity to oppose.

(v) For the avoidance of doubt an application will be taken to have been brought when it has been issued and

served. In the event that no such application for extension of time is brought within the three month period referred

to, the appeal, so far as Amantiss and Wilbury are concerned, will be struck out. In the event that any such

application is brought within that three month period but remains pending before this Court then, in the absence of

any order to the contrary made by this Court, the stay will remain in place until this Court has an opportunity to

consider the merits of any application thus pending.