The Supreme Court has allowed an appeal by David Long and Gerry Wright against a High Court order restricting them from acting as company directors for five years.
The appeal concerned Dublin Sports Café Limited, which operated a bar, disco bar and off-licence in Dublin’s Parnell Centre before entering voluntary liquidation in October 2003. The High Court had imposed the restrictions in December 2005 under section 150 of the Companies Act 1990. The Supreme Court’s judgment, delivered by Mr Justice Finnegan on 16 December 2008, allows the appeal. The judgment does not state any further order made after allowing it.
The liquidator reported an unsecured-creditor shortfall of about €2.4 million. The Supreme Court noted that about €1.78 million of that sum was owed to Long, while both appellants had personally guaranteed a Bank of Scotland loan of €425,410. It also recorded the liquidator’s view that the company’s collapse resulted from genuine business failure linked to its location, rather than dishonesty.
The High Court had found that the directors acted honestly and that the bar, disco bar and off-licence were run responsibly. It nevertheless concluded they had not acted responsibly in two respects: an annual return remained outstanding from May 2002 until the winding-up resolution, and records for the lap-dancing club were inadequate. The club operated from March 2003. The liquidator could not account for some cash receipts and lacked most of the club’s daily dance sheets.
On appeal, the Supreme Court considered the explanations in the directors’ affidavits. It accepted that the annual return had not been filed because accounts were unsigned amid a dispute over audit fees. The accounts had been prepared and were available to the liquidator. In the court’s view, the delay, considered in the context of the directors’ overall conduct, did not justify restricting them.
The court also accepted that daily dance sheets had been kept, but that records seized by gardaí were not returned and many later sheets were mislaid after the club manager moved to Galway. It found that the sheets could have supported full accounts, and that the treatment of card receipts supported the first appellant’s account of how cash was used to pay dancers and other expenses.
The court concluded that neither matter contributed to the company’s insolvency or caused loss to creditors. Accepting the explanations, it was satisfied that the appellants acted responsibly and allowed their appeal.