The High Court refused an examiner’s application for powers that would have allowed him, with court sanction, to disclaim a contract between a fuel company and one of its shareholders. The court held that it had no jurisdiction to grant the requested liquidator powers because the examiner had not established grounds for an order under section 9(1) of the Companies (Amendment) Act 1990.
Ms Justice Finlay Geoghegan delivered the judgment on 29 July 2009. William O’Riordan had been appointed examiner to Fate Park Limited and related companies in May. The application concerned a contract dated 7 September 2008 between Fate Park and Kevin Thomas Cunniffe.
Under the contract, Cunniffe could require Fate Park, during a period in August 2009, to buy his 49% shareholding in Hi-Way Oil (Galway) Limited for €416,764. Fate Park held the remaining 51%. The examiner considered the contract unprofitable. An affidavit submitted in support of the application referred to a company management balance sheet showing net assets of €107,846.38 as at 30 June 2009.
The examiner said a proposed investor required the contract to be disclaimed before investing, and argued that section 9(4) gave the court a separate power to grant an examiner liquidator powers. Cunniffe, who was represented by counsel, disputed some of the facts in the affidavit and opposed the application. The court was told that proposals for a scheme of arrangement had been sent to creditors, with meetings due the following day. The proposals and any written agreement with the investor were not put before the court.
The judge rejected the examiner’s interpretation of section 9(4). She read it as allowing liquidator powers to be granted only where the court first makes an order under section 9(1), transferring specified directors’ functions or powers to the examiner. Although the examiner alternatively sought such an order, the judge found the investor’s stated requirement was not, by itself, a relevant ground under section 9(2). There was no evidence about what the company’s directors had done or were prepared to do in response to the request.
The court therefore found no basis to make an order under section 9(1), and no jurisdiction to grant the liquidator powers sought without one. It did not need to consider the further submissions about section 290 of the Companies Act 1963. The application was refused; the judgment did not decide whether the contract could be disclaimed through another route.