The High Court has refused an application by three shareholders in two liquidated forestry funds for access to documents and information about the sale of the funds’ assets and the companies’ affairs.
In a judgment delivered on 16 July 2021, Mr Justice David Keane ruled that the applicants had not shown it would be just to order inspection under section 684 of the Companies Act 2014. The proposed inspection, he said, would allow them to search for evidence to determine whether they could formulate claims against former directors and others.
The application concerned the Sixth Irish Forestry Fund plc and the Third Forestry Growth Plan plc, both in members’ voluntary liquidation. The shareholders sought records including sale documents, valuations, advice, company approvals, details of fees and benefits, and material about the directors’ decision-making. They said they were concerned that related entities may have received excessive fees or that the assets had been sold at a time that reduced investor returns. Those were concerns and allegations advanced by the applicants, not findings by the court.
The applicants contemplated claims that included applications under sections 608 and 612 of the 2014 Act concerning the disposal of company property and alleged misfeasance or breaches of duty or trust. They also referred to possible prospectus misrepresentation claims. The liquidator had said he reviewed the information supplied by the directors and concluded that the sale and wind-up decisions were appropriate and lawful. That was the liquidator’s position, not a determination of those potential claims in this application.
The judge held that section 631 does not create a free-standing power to order disclosure. It permits disclosure only as an ancillary measure to determining a question arising in a winding-up. He considered the separate inspection power in section 684, which applies after a winding-up order or the start of a voluntary winding-up. He said he doubted that it could be used solely to advance a private interest with no potential benefit to the winding-up, but did not decide that point. The contemplated claims could potentially benefit the winding-up, at least indirectly.
The application nevertheless failed because the applicants’ suspicions fell short of establishing a prima facie case, and the broad request amounted to a speculative investigation rather than focused inspection to assist with a claim. The judge also noted that the liquidator already held the companies’ records and had standing to bring appropriate applications under sections 608 or 612.
The court did not decide whether the asset sale was improper or determine the merits of any contemplated claim. It refused the requested inspection order and directed the parties to try to agree any remaining issues, including costs. If they disagreed, short written submissions were to be filed within 14 days.