The High Court has declared Ann-Marie Connaughton restricted from acting as a company director after finding she had not established that she acted responsibly in relation to Laragh Civils Limited’s affairs. The judgment does not state the duration of the restriction.
Mr Justice David Keane delivered the judgment on 9 September 2016. The application was brought by the company’s liquidator, Michael Fitzpatrick, under section 150 of the Companies Act 1990. Laragh Civils entered voluntary liquidation in August 2012, when it was unable to pay its debts. Gerard and Ann-Marie Connaughton were its directors and shareholders.
The court first rejected Ann-Marie Connaughton’s objection that the application should be dismissed because it was brought late. The liquidator had reported to the Director of Corporate Enforcement in January 2013 and was required to bring restriction proceedings within five months, but filed this motion in June 2014. The judge extended the time for bringing it and allowed the application to proceed.
The judgment records that the liquidator accepted there was no question of dishonesty by Ann-Marie Connaughton. She did not dispute that she was a director when the company became insolvent, or that the liquidator remained obliged to apply for a restriction. The issue was whether she had acted responsibly.
In affidavits, she said she had been a “token” or passive director, had little knowledge of the company’s management and had worked for it doing errands and other non-accounting tasks until March 2011. She said she expected a bookkeeper and accountants to handle its records and accounts, and learned of its serious financial difficulties only when served with the application. The judgment also records her account that personal circumstances and a breakdown in communication with her husband contributed to her lack of knowledge.
The judge said directors have basic responsibilities to learn about their duties, acquaint themselves with the company’s affairs and provide appropriate oversight of delegated work. He distinguished an overseas decision relied on by the respondent and said inactivity or non-involvement did not answer a restriction application. The court’s assessment concerned whether she acted responsibly, rather than whether she understood her responsibilities or had a reason for not participating.
The judgment also considered her submission that restriction would be unjust given her circumstances and wish to establish a foot-health business. The judge said the court had no discretion to withhold a restriction where the statutory conditions applied and no defence was established. He clarified that restriction did not bar her from business generally: it limited directorships of certain private companies with share capital below €100,000.
The court concluded that she had failed to establish a defence under section 150(2) and said it was obliged to make the declaration under section 150(1). The judgment’s concluding paragraph does not set out a term or further implementation details.