The High Court has held James Kelly and Anne Kelly personally liable without limit for the debts of Kelly Trucks Limited, finding that they acted fraudulently and recklessly to put the company’s assets beyond creditors’ reach. It also disqualified both from company management for seven and a half years from the date the order is perfected.
The judgment, delivered by Ms Justice Murphy on 15 January 2019, arose from applications by the company’s liquidator, Gerard Murphy. The company entered creditors’ voluntary liquidation in December 2013 after a dispute with Costello Transport Limited over a defective truck led to a €32,000 judgment and substantial legal costs.
The judge found that, in August 2013, Anne Kelly began transferring the business’s customers to Kelly Trucks Strokestown Limited, a company incorporated with another related company while Kelly Trucks Limited faced a winding-up petition. The court also found that the Kellys later frustrated the liquidation by withholding company records and failing to account for vehicles and other assets. It concluded that James Kelly had participated in the plan, including by transferring company equipment to settle a debt owed to him.
The court ordered Kelly Trucks Strokestown Limited, James Kelly Junior and Patricia Kelly to pay the liquidator €40,820.64 transferred from Kelly Trucks Limited between August and November 2013. They were also ordered to deliver 19 vehicles registered to the company in July 2013, or pay their book value as of 31 July 2013. Anne Kelly was ordered to deliver an Audi A4 belonging to the company, or pay its book value as of that date.
The liquidator had estimated that assets worth €838,908 had been transferred. The judge said the available records did not establish that figure accurately enough to order payment of that amount. The court said it would hear further from the parties about what additional orders could be made. It made no order concerning Kelly Trucks (Ballaghaderreen) Limited because the status of that respondent remained unclear.
The court rejected Anne Kelly’s preliminary challenge to its jurisdiction. It held the Kellys liable for the company’s debts, but declined to make them personally liable for liquidation costs: that relief was not being pursued in the application. The judge said they could face such liability from the date of judgment if they continued to disrupt the liquidation and refuse to cooperate.