The Court of Appeal upheld the removal of Anthony J. Fitzpatrick as liquidator of Ballyrider Limited, but set aside three related orders directing him to transfer money to a replacement liquidator. The court held that the High Court had made those orders under a statutory power that was not available in the circumstances on that date.
In a judgment delivered on 26 July 2016, Ms Justice Irvine dismissed Fitzpatrick’s appeal against his removal under section 277 of the Companies Act 1963. The court found that the High Court was entitled to conclude that the liquidation had not been conducted efficiently and cost-effectively. It said the applicant for removal had to show good cause, but did not need to prove misconduct, personal unfitness or lack of integrity.
Ballyrider, which traded from the Hazel Hotel in Monasterevin, had been placed in voluntary liquidation in 2010. The hotel was its principal asset. An initial auction sale for €630,000 fell through, and it was later sold for €479,000. Fitzpatrick then pursued a claim against the first auction purchaser for an alleged loss of about €150,000. The Court of Appeal noted that the claim had been started in January 2012 and that, three and a half years later, no defence had been delivered. It found that Fitzpatrick had not adequately assessed the case’s likely costs, prospects of recovery or potential benefit to creditors, and had not ensured it progressed diligently.
The court also upheld criticism of the hourly-fee arrangement for solicitor John Tobin’s conveyancing work on the hotel sale. It found that Fitzpatrick had not obtained a letter estimating the likely fees and that the arrangement was inconsistent with his duty to pursue a cost-effective liquidation. The appeal judgment did not determine what conveyancing fees were properly payable.
The High Court had also expressed concern about conflicting accounts Fitzpatrick gave about approval of his remuneration, including a €50,000 payment on account. The Court of Appeal cited those concerns in concluding that the High Court could not be confident he would complete the liquidation efficiently if left in office.
However, the High Court had made its money-transfer orders on 24 July 2015 under section 638(2) of the Companies Act 2014, before appointing George Maloney as replacement liquidator on 30 July. The Court of Appeal ruled that section 638(2) allowed consequential directions only where an order had been made under section 638(1); the required removal and appointment under that provision had not occurred on 24 July. The court therefore allowed Fitzpatrick’s appeal against the three orders concerning €51,000, €2,752 and €50,000. It dismissed his appeal against his removal and, as a consequence, his challenge to Maloney’s appointment also failed.
A separate order concerning transfer of the company’s books and records and €73,460 in the liquidation account was not among the appeals addressed in this judgment. Fitzpatrick accepted that he had to comply with that order if his removal was upheld. The appeal court’s judgment concerned the removal, the three money-transfer orders and Maloney’s appointment; it postponed adjudication on a separate appeal concerning costs.